Risk control (forex risk management).
One of the most important components of Forex trading is risk management, and a novice trader sometimes has no idea how important this issue is and how it affects the overall financial result of trading.
Risk management in Forex involves the use of a whole range of measures designed to reduce financial losses from the influence of both external and internal factors.
Before creating your own management system, you should understand what risks exist in forex .
Risk control when trading on the stock exchange can be associated with both unpredictable changes in exchange rates and purely technical reasons. But the result when it occurs is usually the same - the occurrence of losses.
Reduce technical risks.
This category includes all the troubles that arise as a result of failures of commercial equipment, and there are quite a few of them:
Lost connection - usually this trouble happens at the most crucial moment, so before you start trading, think about what you will do if it goes missing contact with a broker. The easiest option is to use a duplicate terminal on your mobile phone. You can read how to use this alternative in the article “ Mobile trading on Forex ”.
Freezing or equipment failure - your computer has broken down or your terminal has frozen, but the transaction is not closed.
If you wish, you can use the same recommendation as in the previous case, or you can simply contact the broker by phone and manage the transaction using a telephone password. Violations by the broker - this recommendation applies to those who trade large sums, otherwise the time spent searching for the truth will cost more than the money returned. For additional security, you can create a screenshot after opening each transaction; it will serve as an additional argument when resolving a dispute.
Combating currency risks.
It is simply not possible to trade completely without losses on the stock exchange, but you can try to reduce them to a minimum.
Setting a stop loss is the simplest and yet most effective way to reduce losses resulting from exchange rate changes. The main thing is to use this order immediately when opening a new order. How to set a stop loss and correctly determine its size is described in the link provided.
Using minimal leverage – the less leverage you use for your Forex trading, the greater the likelihood of not only saving your deposit, but also making a profit.
Conduct a simple experiment, to do this, reduce your leverage, or simply the volume of transactions carried out, by 10 times, and trade like this for a week. And then compare Profit factor before and after, and you will be pleasantly surprised.
Trading only with the trend is a common axiom that must always be followed, since trading during a correction requires a lot of experience and endurance. So why put your money at risk once again.