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How do you should risk in a single trade in Forex market

Binary Options Trading forum Trading Journals How do you should risk in a single trade in Forex market

This topic contains 2 replies, has 3 voices, and was last updated by  kate456 2 weeks, 2 days ago.

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  • #4569

    vickymack
    Participant

    This is a very common question among the novice traders and most of them think that by taking 2% risk in every single trade they will be fine. However, this common question has a very in-depth explanation. Only the professional traders with years of trading experience can really understand the true importance of this question. When you trade the Forex market you can’t really make any profit for the first 6 months. In fact, most of the traders blow their entire trading account within the first 6 months of their trading career. So do you think that they don’t follow the most famous 2% rule of Forex market? Most of them do follow this rule yet fail to make money. Today we will discuss the advance knowledge of money management and trader’s psychology. After reading this article we can assure you that lots of things will be change deep inside you.

    Trade only to lose
    Sounds very weird? But this is the first step that you should blindly follow as a new trader. Most of the new traders have a tendency to think that this market will give them profit only. They really never understand that losing is just a part of this profession. So you are basically training your mind not accept the loss. This eventually forces you to risk a huge amount of your trading capital. In fact, many new traders have blown their entire trading account due to their stubborn emotion. But you should not learn to lose with your real account rather use your demo trading account so that you can really understand the nature of this market. But when you demo trade the market considers it very seriously or else you will never realize the feeling of losing trades in real money. Don’t jump into real investment unless you can double your trading account with managing risk.

    Know your own risk factor
    All the professional traders risk the only portion of their trading account. They make sure that their losing trades is not going to affect the psychology. If you ignore the importance of risk management factor, then you might even lose your entire trading account in few traders. Before you place your trade you should also calculate the Forex margin requirement to keep your trade running. Sometimes the new retail traders often risk too much in a single trade and when the trade goes wrong their trades are closed with a margin call. A margin call is a unique feature offered by the Forex brokerage firm to protect the traders account from negative balance.

    Balance between your stop loss price and risked amount
    Before you set the lot size, you need to learn to place your stop loss perfectly. Some traders often say that they will use the mental stop but this is not possible in real life. Even the most experienced traders in the online trading community used pretended stop loss for their open trade. So based on stop loss price you should set your lot size. For instance, if you use a wide stop loss then you should scale down your lot size to minimize the risk exposure. On the contrary, if you find high-quality trading signals with a tight stop loss then you can increase your lot size to trade market within your own risk tolerance level. Being a currency trader you must have the capability and mental strength to use dynamic lot size. If you trade the market based on fixed, then chances are very high that you won’t make any real progress.

    Managing your risk is very crucial in the Forex market. If you think that you can trade the market without facing any losing trades, then are making a big mistake. You need to work hard and learn advanced risk management skill. If possible start using the trailing stop loss features to maximize your profit potential to book a certain portion of your profit.

    #4621

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    #4713

    kate456
    Participant

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