Thread: Risk Management In Forex Trading.

Risk Management in Forex Trading is a term that is very important in trading world and at the same time is a major point which mostly gets out of focus when traders start real time trading. The first and foremost difference in trading a demo and a real account is the human psychology. The point is here that how to overcome this problem?

Risk management is about ensuring you do not go broke. By keeping each trade to just 2% of capital, an account would need to lose 50 times (excluding broke execution fees) to lose everything. An even more cautious approach is to take 2% of the remaining capital and trade that. This reduces the capital sum deployed for each trade, but ensures that an account would never run down to zero.

Forex trading is all about managing different aspects of trading and managing risk is also important for traders, a trade should predict the percentage he is going to invest, return and should have as surplus fund.

Trade like a technical analyst. Understanding the fundamentals behind an investment also requires understanding the technical analysis method. When your fundamental and technical signals point to the same direction, you have a good chance to have a successful trade, especially with good money management skills. Use simple support and resistance technical analysis, Fibonacci Retracement and reversal days. Be disciplined. Create a position and understand your reasons for having that position, and establish stop loss and profit taking levels. Discipline includes hitting your stops and not following the temptation to stay with a losing position that has gone through your stop/loss level. When you buy, buy high. When you sell, sell higher. Similarly, when you sell, sell low. When you buy, buy lower. Rule of thumb: In a bull market, be long or neutral - in a bear market, be short or neutral. If you forget this rule and trade against the trend, you will usually cause yourself to suffer psychological worries, and frequently, losses. And never add to a losing position. On Armada Markets the trader can change their trade orders as many times as they wish free of charge, either as a stop loss or as a take profit. The trader can also close the trade manually without a stop loss or profit take order being hit. Many successful traders set their stop loss price beyond the rate at which they made the trade so that the worst that can happen is that they get stopped out and make a profit.

Originally Posted by vic84

Forex trading is all about managing different aspects of trading and managing risk is also important for traders, a trade should predict the percentage he is going to invest, return and should have as surplus fund.

Of course, we must use our money/funds in forex trading adjusted with risk we are ready to bear. I think, we should use small amount to be able to learn and hone our psychology.



"Invite your friend, get $10 and win $5,000"

Risk management is so important in Forex; if we want to be expert then it is simply not possible with it. I have been trading for last 3 years and the only lesson that I have learned time and time again is to trade with strict money and risk management. I have also learned a lot thanks to be trading with OctaFX, it has great demo contest that has taught me all these lessons, it is not easy to get motivation on ordinary demo account, therefore I use cTrader demo contest, where I could win up to 400-500 USD prizes.

Risk Management is an essential part of the trading plan and what need to be done here is that you need to give complete focus on Risk Management plan because personally I have seen many traders in the market who fails due to weak risk management and they loss all of their money in the market in trading.

Risk management is required by traders in the forex business. traders should be trained in carrying out risk management using a lot of money managemant and settings that correspond to: leverage, capital and margin of every deal we do

Originally Posted by Uncle Gober

Risk management is required by traders in the forex business. traders should be trained in carrying out risk management using a lot of money managemant and settings that correspond to: leverage, capital and margin of every deal we do

As a trader, we must have risk management and we also must understand that forex will not easy as we thing. Try to more improve our trading skills to make us get more maximal result. Risk management must be applied with discipline.

"Invite your friend, get $10 and win $5,000"

Risk Management is a key to success in the Market, with out proper risk Management we cannot expect a good result in Forex Trading, because risk is an essential factor and we cannot avoid risk so the best thing that could be done is to prepare a proper risk management Plan so that we can succeed in trading.