Risk management or risk management in the foreign exchange market is one of the indispensable parts of profitable trading. It is impossible to be a successful trader without understanding when to exit the transaction or how to properly reinvest profits.
Risk management is one of the most important components of profitable trading. A lot of various articles of varying degrees of interest and usefulness have been written about this.
Nevertheless, there are only 5 simple, but very effective tips that will help to avoid unnecessary risks in trading and increase the efficiency and profitability of your trade.
TIP NUMBER 1. SET REAL GOALS AND PLAN TO ACHIEVE THEM
You come to the foreign exchange market not just to trade, your main goal is to make a profit. And how much do you want to earn – a thousand, one hundred thousand or even a million dollars?
If you are an adequate trader (and only such people read us :)), then you should really assess the situation – after all, it’s unlikely that you can make a million dollars from a deposit of $ 100 per month.
Set a specific goal. Together with the real goal, it is also necessary to determine how to achieve it.
And for all this, you will need a trading plan. It will be he who will remind you of your goal and progress in its achievement. In addition, recording all your trades in this plan will help you hone your skills by analyzing losing trades.
About how to create your own trading plan. Working methods:
- The trading plan of the trader – 17 rules of my trading business!
- The diary of the trader and the trading plan are important components of success
TIP NUMBER 2. DO NOT RUSH TO OPEN DEALS. CHECK IT OUT!
Most traders trade from home. Of course, this is very convenient – I got comfortable in front of a computer in home clothes with a cup of coffee, launched a browser and a trading terminal, and trade yourself. And therein lies a serious risk.
The fact is that such an environment contributes to relaxation, and yet you use in the trade quite significant amounts for an ordinary person. And such a “relax” often leads to ridiculous mistakes due to the human factor. For example, instead of 0.1 lots, you open a deal in the amount of 1 lot. Or in general, instead of the Buy button, click Sell.
Not only are these mistakes stupid, but they are also very offensive. Do not be lazy, check your order before opening. It only takes a few seconds, but it saves you money and kilometers of nerves.
About how to work with transactions in the foreign exchange market:
- We trade without stop loss: 3 alternative methods of limiting losses on the Forex
- 3 ways to open a transaction in the foreign exchange market
TIP NUMBER 3. TAKE YOUR PROFIT
One of the principles of successful trading is: “Let’s profit to grow.” Of course, it is very nice to see how the price goes in your direction, and the numbers of current profit on the transaction are growing. But this principle does not mean that you need to push the take-profit level or remove it altogether in order to earn even more money. Greed in the foreign exchange market always leads to losses. Now the price makes you happy, and after a few seconds, it has already turned around and is moving against you.
Take your profit, do not leave it to the market – be safe with all available tools. This can be a transfer of the transaction to breakeven, the use of a trailing stop or partial profit-taking on the transaction.
How to close transactions:
- The best option for locking. 3 opinions on Forex locks
- What is a stop loss, how to calculate and set it correctly
- Trailing stop: do not miss a profit on Forex
TIP NUMBER 4. “BEAT OFF” YOUR INVESTMENTS
With the help of our training articles on trading, money management and the psychology of a trader, you successfully trade in the foreign exchange market. The numbers on your balance are constantly growing and delighting you. Do not leave all the money in the trading account, but gradually withdraw it in order to “recapture” the funds that you invested in trading.
Ideally, it is advisable to return all the money invested, and only “bargained” funds should remain on the deposit, in the event of the loss of which (which is unlikely to happen if you read our materials), you simply remain in a breakeven.
It is necessary to withdraw money prudently – after all, the withdrawal of excessive amounts may affect the size of the positions you open due to leverage.
How to withdraw funds from a trading account:
- Bankrupt broker! How to withdraw money from forex
TIP NUMBER 5. TAKE A BREAK FROM TRADING
You should always remember that you are trading in the foreign exchange market not for the sake of getting any emotions, but for making a profit. Currency trading is not a casino, but a job. And, like in every job, you need to take weekends, vacations and just some breaks to relax.
Today, the trade did not go, or just feel tired? It is not necessary, with clenched teeth, to go ahead, threatening the market “to take your own anyway.” Take a break, relax – it will benefit both you and your deposit.
A bit about the psychology of trading. How does this happen:
- Fear, anger and sadness: enemies or friends of the trader?
- Meditation for the trader