Risk control (forex risk management).
One of the most important components of Forex trading is risk management, and a novice trader may not even realize how important this issue is and how it affects the overall financial results of trading.
Forex risk management involves a comprehensive set of measures designed to reduce financial losses from both external and internal factors.
Before creating your own management system, you should understand what risks exist in forex .
Risk management in exchange trading can be related to both unpredictable changes in exchange rates and purely technical reasons. However, the result when these occur is usually the same: losses.
Reducing technical risks.
This category includes all the problems that arise as a result of trading equipment failures, and there are quite a few of them:
Connection loss – this usually happens at the most crucial moment, so before you start trading, consider what you will do if you lose contact with your broker. The simplest option is to use a backup terminal on your mobile phone. You can read about this alternative in the article " Mobile Forex Trading ."
Hardware freeze or failure – your computer crashes or your terminal freezes, and the trade remains open. If desired, you can follow the same recommendation as in the previous case, or simply contact the broker by phone and manage the trade using the phone password.
Broker violations – this recommendation applies to those trading large sums; otherwise, the time spent seeking justice will be more costly than the money returned. For additional security, you can take a screenshot after each trade; this will serve as additional evidence in dispute resolution.
Combating currency risks.
It's simply impossible to trade completely without losses on the exchange, but you can try to minimize them.
Setting a stop-loss is the simplest and yet most effective way to limit losses due to exchange rate fluctuations. The key is to use this order immediately when opening a new order. How to set a stop-loss and determine its size correctly is described at the link provided.
Use minimal leverage – the less leverage you use for your Forex trading, the more likely you are to not only preserve your deposit but also make a profit.
Conduct a simple experiment: reduce your leverage, or simply your trade volume, by 10 times and trade this way for a week. Then compare your profit factor before and after, and you'll be pleasantly surprised.
Trading only with the trend is a truism that should always be followed, as trading corrections requires extensive experience and perseverance. So why risk your money unnecessarily?
