Forex risks and how to reduce them
Risk Disclosure Forex trader knows everyone. But it would be desirable to trade! What drives people to the path of currency trading? Desire to make money own mind, to create a new source of income - in the first place. Of course, often the cause of acts and greed and excitement, interest and just try. But we take a sober calculation, based on the premise that a trader wants to consistently make money from their own mental effort. In this case, special attention should be given to risk reduction is the Forex market.
Types of risks in Forex
They can be divided on trade and non-trade (synonyms - market and non-market). By trading include:
* Risks of changes in foreign exchange rates.
* Risks of leverage.
* Broker choice.
* Market panic.
Non-trading risks occur when the transfer of funds to another trader in control (except PAMM accounts). Here also include actions of central banks (foreign exchange intervention) and the government, natural disasters, acts of terrorism and all sorts of indirect impact on the market. And also less risk after backtest trading in actual accounts.
Predict non-market risks are 100% real. But they can be reduced by trading not one but several currency pairs using multiple trading strategies, trading and manual machine (advisors). It is worth to invest not only in their own trade, but also in other assets.
In trading in the first place it should be remembered properly run, ie money management. Give below a few simple rules that will help you reduce the risks of trading:
1. Expose stop orders immediately after entering the market.
2. Use reasonable leverage (1:100 - 1:200). Sometimes, in the case of the account utsanovki trading advisor, proper use of 1:500, but in such a risk manual trading often unjustified.
3. Discover new position only if you understand why you do it and have a clear plan.
4. Trade with the trend. If you catch a sliding movement, exercise caution, trade in small volumes.
5. Cover losing positions as quickly as possible.
6. Trade in those brokers trust. If you already have an account with a broker or your broker, to put it mildly, is in doubt, I recommend Forex4you or Alpari, it is robust, reliable, dealing cents. 7. During the actual trading is better to have insurance in case of power off or broken "iron". Many traders have not one, but two connections to the Internet, as well as a spare laptop (computer).
These rules are universal and simple. Take their own blueprint.
Other risks in Forex
When the currency pair exchange rate changes, it is good. Indeed, precisely because this trader makes a profit. But what if the rate has changed for the worse side for us?
Someone sits out, holding a losing position open and hoping for a reversal of the course. Someone is using the averaging method or Martingale, thereby increasing the burden on the deposit. The right decision - to quickly close a losing trade.
If at the end of the week, you can see that the loss exceeds the income, while you trade fixed lot, it means that either the week was not the best, or your trading system needs to be adjusted.
Please note an important caveat: to make a profit with Forex Exchange does not necessarily engage in making projections, where the price will go. You can use mathematics, including Martingale method, the positive rate swaps (strategy CarryTrade) trading robots or advisers.
A little bit about leverage and related risks in Forex. Many traders are afraid to use or vice versa - using high leverage thoughtlessly. With the right approach, high leverage can bring more profits than the standard version of 1:100. but need the practice and understanding of what you do (as you trade). Advise beginners to start with a 1:100 or 1:200 usual, and eventually move to the advanced version of 1:500.
Opening the position without placing stop orders, the trader risks not only steer the course, but also technically. After all, can turn off the electricity or the computer crashes. Purchase a uninterruptible power supply or laptop, connect to another provider who will provide you with not so fast but stable internet connection in case of force majeure. Believe me, it is very important when you trade on decent money.
Choosing a broker. A very important point. It depends on the broker trading conditions, so at this point you need to focus. In other words, choose a broker with trading conditions for themselves. The minimum spread and exhibition, the possibility of trading for cent accounts, NDD and others - a good broker is always ready to provide the best conditions for a new customer. Do not settle for less.
A few words should be said about a panic on the stock exchange. Quite often, especially after the release of important news, the currency price starts jumping like crazy. Trader sees this and is struggling with the fear of losing money and greed, the desire to grab a piece of it is during such movement. Awareness tends to zero, incorrect transaction overestimated - eventually lose money.
Do not be like the crowd. Off panic! Act only within its own plan - your trading strategy. The market will be tomorrow and the day after. Sometimes it is better not to make money, you lose.
Remember that the risks in Forex can and should be reduced. Booked - is forearmed. Good luck!
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