Be careful, your money could evaporate if you do not pay attention to the risk manajamen trading. Remember that forex trading investments that are classified as high risk. This means that forex trading has a relatively high risk. One of the highest among other financial investment instruments.
Risk Management
Risk factors that you should know before starting forex trading:
1. Have the possibility of losing funding 100%
2. Flow of funds very quickly (very liquid)
3. There is no method of trading that can guarantee you 100% sure winner. There are many good trading method, but no one can guarantee profits 100%
4. Forex trading is not a ?quick rich scheme? that can make you rich quick without working hard.
There is no success without hard work. Hard work is an integral part of those who experience financial success in life. Including those who are successful with forex trading .
It takes hard work to study and analyze market behavior so that we can predict the price movements accurately. So also is required when extra mental trading results do not correspond with what we expect. Ask the successful traders you know, if they had experienced ups and downs in their trading. And the answer is almost certainly ?yes?.
Success is only provided for those who want to try and learn continuously meperbaiki himself. Well related to the risks that must be faced if we want to start investing in forex, special tips needed to minimize or even reverse our position that had to be returned minus a positive and to make a profit. Here are some tips and management of risk you can take:
1. Cut Loss????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Of action is to close your position opposite to the movement of market prices. Cut loss is used to limit the losses that do not pose an even greater loss. For example, say we?re opening our position on the GBPUSD 1.8000 Open Buy on the price. Open a Buy position means that we expect the price to rise above 1.8000 so that we get lucky. We hope the price goes up to 1.8100, so for example we can obtain 100 points profit. But alas, it turns out the price moves against what we expect. It turned out that the price goes down continuously from 1.8000 to 1.7980 and still show a tendency to fall. Well than we are experiencing further losses and ultimately have a better margin call then the position is closed even though we bear the loss of 20 points (1.8000 to 1.7980 = -20 points). This action is called a cut loss to close losing positions in order to prevent greater loss. Other Case Details: Mr A opening Buy GBP / USD at 1.8850 with the quantity of 10000. Mr. A predict that soon he could liquidate his position at 1.8900. Therefore he made ??his position to Risk Management: Stop Loss at 1.8800 and Stop Limit at 1.8900. Apparently erratic price moves down to 1.8820 range. With all due consideration, Mr. A would like to just close the position at 1.8825. So that Mr. A 25 point loss (1.8825-1.8850 = -0.0025) Profit and Loss is calculated by the following formula:
Note: Position Close: 1.8825 # Position Open: 1.8850 # Quantity: 10000 # Then: Profit / Loss = (1.8825 ? 1.8850) x 10000 # Loss = -0.0025 x 10000 # Loss = $ -25 (Mr A suffered a loss of $ 25)
2. Switching
This action is similar to cut loss, but the difference after closing the position we are losers, we are opening new positions in the same direction with the movement of market prices. In the same case with the above cut loss, then we close our position at 1.7980 and then we open a new position of Sell as prices tend to decrease. Thus if prices continue to fall reaching 1.7900 then let?s say we have the overall loss of 20 points but gained a profit of 80 points (1.7980-1.7900 = 80) so that the total profit we still get 60 points.
Related posts:
- Forex Risk Management Precautions
- Simple Facts About Forex Trading
- Forex Trading and Controlling Risk
- Forex Trading Advice
- Auto Forex Trading
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