Risk management is everything!!!

Discussion in 'For novice traders' started by Francmorio, Jun 29, 2019.

  1. Francmorio

    Francmorio Member

    Guys, I've been trading for sometimes now, the only advice I can give to newbies is that Risk Management is everything, if your strategy does not incorporate a proper risk management, you're doomed. The only thing you have control of in the forex market is the amount of risk you're risking in a trade.
  2. Tengkorakfx

    Tengkorakfx Member

    What about trading system? Mine only got supply and demand and it also shows good risk management since it tells me on where to put my SL and TP on each trading plan.
  3. broforex

    broforex Member

    Often we see examples of cases where a trader has a good trading strategy, but the transaction he does is not actually profitable, but ultimately loses. This can only happen if a trader has poor money management.
  4. Tengkorakfx

    Tengkorakfx Member

    Let's say someone that has a strategy that yields 1:2 profit ratio with fixed SL and TP but has poor winning rate like less than 50%. Even if you profit 4 times and loss 6 times will ended up in a good result. The thing is you have to know what is the good time to not make it worse or loss more than 8 times in 10 trading times.
  5. broforex

    broforex Member

    small example, First of all, first determine the maximum amount of loss that you are able to receive. We take the example of a 2% risk per trade. If there is a loss of 3 times in a row, then the account is only down 6%. If the 4th trade makes a profit, then a RR of 1: 3 will erase all of our losses.
  6. broforex

    broforex Member

    In the context of forex trading, Money Management is the management of funds in our trading account. This includes how many lots in each trading position, what is the distance between the entry price (open position) with Stop Loss (SL) and our profit target, and what is the maximum number of trading positions that we will open at one time.
  7. liafatlouie

    liafatlouie Member

    Some traders say that using Stop-Loss means we have lost money. So many beginners who do not use Stop-Loss when trading. Though forex is unpredictable, it can go up or down drastically, so trading without Stop-Loss can make large losses/margin call.
  8. broforex

    broforex Member

    Yes, Agree. Stop Loss is the most important thing to put is your every positions.
    You make a buy or sell transaction on a particular currency pair . The short reading is something like this:

    You Buy EUR / USD transactions, meaning you buy the Euro currency and sell the US dollar.
    You Sell GBP / USD transaction, meaning you sell Pound Sterling and buy US dollars.

    If you buy and price / chart moves up, or sell and the price / chart moves down, then you get a profit. But conversely if you buy transaction then price / chart move down, or sell and price / chart move up, then you loss.
    You need stop loss when you loss.

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