Author Topic: Three unusual ways to reduce risk in trading  (Read 17 times)

Offline shanewrights

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Three unusual ways to reduce risk in trading
« on: September 22, 2017, 06:56:01 PM »
The online trading profession is a little bit different. Most of us think this market can be traded easily and we can make a profit without having any proper knowledge. But trading the Forex market requires an extreme level of knowledge and reliable trading strategy. If you are new to this industry, then make sure that you have learned all the essential element of Forex market or else you will be losing money like the 95% of the traders. The novice traders consider trading as a get rich quick scheme, and thus they execute big lot size trade with any risk management plan. Sometimes this might help them to make a huge amount of profit, but considering the long term impact, they are just on the losing side of this industry. You need to learn about the associated risk in trading to become a successful trader.

Book your profit
Making money is not all easy rather it is one of the difficult tasks in the world. People in the United Kingdom often consider trading as their best alternative source of income. Even there some traders who have quitted their day job and taken trading as their full-time profession after spotting the lucrative profit potential. When you place your trade, you need to learn the perfect way to book your profit once the trade goes in favor of you. Instead of using the random percentage number you need to use the knowledge of support and resistance level. Based on that you can trail your stop loss and book a certain portion of your profit so that you wonít have to lose any money. But during your early stage of your trading career, you can understand this system. So we highly recommended you to use the demo trading account to learn more about the dynamics of this Forex market.

Use partial closing system
Partial closing is very much popular system among the professional trader. Most of the expert traders in the exchange traded funds community always close their deal partially after it moves a particular portion in their favor. But when you do this you must be extremely careful since it will change your risk reward ratio in trading. For instance, if you risk $ 100 in an individual trade then if you need to partially close your trade in such a way that the closing amount is equal to $100.Before you place your trade in the market always assess the associated risk in trading and aim for high-risk reward trade. As financial instrument trader, you will always have some losing trades so if you donít trade with high-risk reward ratio than it will be extremely tough for you to make a profit in the long run.

Never risk more than 1%
Most of the traders are well aware of the 2% risk management rule in the Forex market. But in our today's article, we will tell you that you should never risk more than 1%. This thing will greatly help you if you are new to this industry. You must feel comfortable with your losing amount or else it will force to execute your trade emotionally. When you trade with a big lot, itís true that you will have a higher reward for each winning trade, but you need to consider the associated risk in trading also. This market is not for inexperienced people. You need to have your trading system and based on that you should place your trade.

The above three are the universal rule of Forex money management. Some traders often might say why we are risking less than 2% but if you follow this rule for three months than you will have realized the reason. Make sure that you do your technical analysis in the higher time frame and never trade without assessing the fundamental factors of this market.

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Three unusual ways to reduce risk in trading
« on: September 22, 2017, 06:56:01 PM »