The Forex market is a market where if you make mistake, the possibility of losing your trading capital becomes very high. In this market, you will lose some money and it is natural, and no matter what you do you can never remove the risk. All thought you can reduce the risk exposer by taking proper measures and for that, you just need to follow a proper risk and money management rule while trading. If you follow proper risk management rule, it will be quite hard for you to lose all of your balance. So, in the following article, we are going to give you some risk management tips.
Planning your trades
If our like when we want to go on a trip, the first thing we do is to plan everything for the trip and act according to it. So, in trading when you are thinking about opening a position, you must make a plan for that like how much risk you are going to take if you can put stop loss and take profit level according to your risk-reward ration and what can be the worst-case scenario that can happen from that trade. If you have all the answers, you can execute that trade. In this way, you can trade safely without increasing the risk exposer. There is a common line that says “plan the trade and trade the plan” it means first you need to calculate everything that is needed to open a position and if everything is ok, you may open a position. Always try to use Saxo Forex broker so that you get the best price in execution process.
Take risk of not more than 1%
Trading is such a place where you need to take risk of your money to make money and without risking your money you can’t earn single money from this market. So you just need to take the risk but you suggest you not take more than 1% risk of your trading account in any trade. For example, if you are trading with a $10,000 account, you must not risk more than $100. When you do so,it might not be the best idea. But people with bigger account balance often increase this risk to 2% or 3% and they might take the risk but it increases his risk exposure. So we would always suggest you keep your risk below 2% if you want to stay alive in this market because once you lose your capital, it will be really hard to gather another lot of trading capital.
Setting stop loss and take profit
If you observe a successful trader in the Singapore, you will see that no matter how good is their analyzing power they will always trade with take profit and stop loss level. Trading without a stop loss and take profit is like gambling in a casino.If you trade like that, it will be good for you to leave trading. Because the CFD market is so volatile that no trader can close the market manually even if they are sitting in front of their trading platform. Even sometimes the market becomes so volatile that stop loss and takes profit order misses locking the position at a certain level. So no matter how sure you are about a signal you must not leave your trade open without a stop loss or take profit order.
Giving proper breathing space
It is not always possible to open a trade that will instantly go in your favor because some trade needs time to give you the potential profit. So while you open a trade and set stop loss and take profit level, you need to consider that you are giving the trade a proper breathing space. This is because using a tight stop loss can also increase your risk exposure.
So, if you want to make a career in trading, you should follow these tips for your benefit.