Forex risk management, reduce losses to a minimum

The process of risk management of forex important things too in currency trading, where the capacity may be double-edged sword. You may find that your operations profitable in the acceleration, but few people pay attention to the acceleration of their losses as well as through the same ability that attracted to the Forex trading first place.

When we introduced the first time to the world of Forex trading, one of the first things that we hear is the extent of scale which could be up to profit from Forex. Despite the fact that this is true, but it is not realistic. We often see ads that talk about the huge profits of up to 50% in one week, and start trading for a while, and suddenly we come to the reality that tells us that these profits are not sustainable. And after that see reality, we must look to the wisdom that the degree of rolling up to the discovery of the way in which risks can be managed Forex.

Although this seems Kalpdah for Forex traders who have self-appointed teachers in the Forex, but that many of the professional traders in this market they will not risk in Forex more than 1% of their accounts in any transaction. And while this may not seem much, you have to remember that you aim to achieve more than run the risk of it, and this calls for work on the forex risk management. Forex strategy two for one (2-1) will require you to the traditional target profit rate of 2% of all trade. In addition, look at all individuals who are able to "Bernie Madoff" fraud of billions of dollars for them through the provision of 1% per month. You have to ask yourself, Are these people stupid? Or they had dared to hope the excellent profits? To understand the appeal of this matter, you have to understand the principle of compound interest.

For example through the use of "Bernie," a monthly revenues by 1%, you're talking about profits increased by 12.68% annually.And while this percentage does not look great, but that will double you your account 3 times in 10 years, and while this also does not seem to matter great, but I can assure you that there are many willing to do this. What happens if the revenues raised to 15% per month, you can now increase your returns 3 times in 8 years. If your initial account is only $ 10,000, will make your 40,455.58 dollars at the end of the contract. Must reiterate that these profits are very conservative, as the good Forex trader may make a profit of up to 25% per month, and turn the 10,000 to 93,132.26 in 10 years, and this great profit as you see.

Forex risk management enables you to stay in the market after exposure to a number of losses. If you are trying to risk, including 1% only in the process of circulation, the loss of these trades in a sequential manner is less than 3% of your original. While the risk by 5% in the same trades, you will lose 13%, in what you want to run the risk of loss?

Through the vision of what compound interest can do, you have to realize that it operates in both directions as well. Where simple forex risk management in both a trade, you allow the development of your account, and the same degree of importance, the access to expertise that enables you to be a better trader. In the end, if you are bankrupt and was Mvjura your account, you are trading.

The best ways to help you in forex risk management is well to observe your reactions when the psychological development of these transactions. If you feel that you have to sit and to monitor closely the trading process, it is very likely that you are risking more than you are comfortable in terms of his psychological. And while that risk management does not change the calculation, but it affects your decision to leave or not when the system tells you so, or when you can not afford more pressure. A test of the test, I found if I can not stay away from the computer when the amount that I trade it in motion, that it is too much. In addition, the major idea behind trading is to make profit without worrying them, remember that you started trading for the idea of ​​freedom and that freedom is certainly were not sitting in front of the computer anxiety of losing a trade specific. Therefore, forex risk management process is the best solution to gain your freedom that I sought for.

Through testing different percentages of your trading account, you will eventually find out what is the ratio that suits you, and you will be surprised by the size of the profits you can get even with the lowest risk. That I learned how to circulate properly, the profits will come. But you will have the ability to stay in the game long enough to get to that point.