How risky is your trading strategy?

The sad statistics of Forex trading are known to almost every novice trader.

According to available data, no more than 3-5 percent of all those who try their hand at stock trading are successful investors.

Moreover, this statistic is familiar to many first-hand; almost every newcomer has lost their deposit as a result of unsuccessful transactions.

There are many reasons why this event happens, but the main one is the riskiness of the strategy used.

It is the error of the chosen strategy, and sometimes its incorrect application in real trading, that leads to irreparable losses.

How to determine the risk level of your strategy?

First of all, it should be immediately noted that if you trade using strategies such as scalping and martingale, your trading will definitely be accompanied by high risk.

This rule also applies to the use of advisors based on the named strategies.

Trading options that do not provide for the placement of stop orders also have a high risk; unfortunately, such exist.

Another sign of high risk is the fact that if the strategy involves transferring positions over the weekend, this often leads to the stop loss not being triggered and, as a result, more significant losses.

Not least important is the level of planned losses at which your position will be closed; options that involve more than 5% loss from one trade will definitely be risky.

After you are convinced that your strategy does not belong to those mentioned above, you should pay attention to such an indicator as the level of risk with which you open transactions.

In simpler terms, this is the relationship between the size of your deposit and the volume of the position being opened, and the strategy used is not always to blame.

Often in the instructions for using an advisor or strategy, we find that the recommended deposit is, for example, 5,000 US dollars.

But there is only $500 in the account, and the lack of funds to open a position is compensated by leverage. That is, in relation to the above example, the risk of transactions increases 10 times. And the author of the strategy is not at all to blame for this, but the one who does not follow the written recommendations is to blame.

There are also special scripts that allow you to independently determine the level of risk; there are several of them on our website:

• Trader Assistant - http://time-forex.com/skripty/trade-assistant helps set the parameters of opened orders, including regulating the volume of transactions depending on the planned risk:

• Money management script - http://time-forex.com/skripty/skript-mani-menedzhment A simpler option, which, after installation, shows the risk level as a percentage and the probable losses on your transactions in dollars:

Using these scripts, you can still calculate on a demo account how risky your strategy is, taking into account the planned volumes of transactions. And decide whether it’s worth using it or whether it’s better to reduce the volume of future orders. After this, you will only have to rely on a successful trend.