When you are trading Forex whether online, via a mobile trading platform or over the telephone there is always going to be an element of risk attached to those trades. You need to be aware of the risks involved with every single trade you place and always put in place a trading strategy that will minimize your risk and potential trading losses.
With this in mind we have compiled the following trading guide in the hope it will enlighten you on ways that you can manage and reduce the risk attached to any trades you are considering placing on any Currency Forex Pairing. There is a very fine line in regards to maximize your returns and strictly limiting any and all potential losses and keeping on the right side of that line is critical!
Trading Budget – You should always use your trading budget as the basis for just how much you will wager on each and every single Forex trade you place. One commonly made mistake by novice Forex traders is that they will place trades far in excess of what their budget can sustain for any amount of time.
So when you are trading Forex you need to set aside a percentage of your available trading budget to ensure if you place a run of losing trades you still have ample funds available to carry on trading in the hope your luck will turn and you will then start to see the returns rolling in on successful trades you place later on in the day.
Stop Loss – You will have to put in place something known as a stop loss limit each time you have a Forex trading session. Many traders will set aside 20% of their available trading bankroll to trade on any single session and if they reach that amount through a series of unsuccessful trades they will stop trading to ensure they have still got a large proportion of their trading budget still available.
Inexperienced traders do need to put into place a stop loos limit, for it is far too easy to get carried away when trading Forex and that can often lea such traders to completely busting out their budget and trading account balance when the carry on trading for too long.
Profit Taking – You should also have in place a figure that you will see as your winning goal hen trading Forex, This winning goal can be any amount but usually it will be equated to your starting trading budget, and as such if you want to put into place a conservative trading winning goal aim to increase your starting budget for 25% of its value.
As soon as you reach that winning goal through a series of winning trades then stop trading for the day. By using such a system you will find you have far more winning days than losing one’s!
Other Ways to Manage Risk When Trading Forex
The most successful Forex Traders are not only vastly experienced in trading any type of currencies, they can also spot a good deal when they see one. With many Forex Brokers as eager as ever to attract new clients to their respective sites there is also something of an ongoing battle between them in regards to Forex sign up bonuses given away to their customers.
Anyone thinking of executing Forex related trades online should be prepared to spend some time checking out just what bonus offers are available at each Forex Brokers, for by utilizing such promotional offers it is often possible to reduce the risk on your trades by taking bonuses form two different Brokers and then hedging your trades.
By accepting Forex Broker bonuses you can then perform trades on which you have both sides of those trades covered using the bonus funds at each site and by doing so you are guaranteed to have placed a winning trade with those funds irrespective of the way the currency’s value swings.
Their is something of a very fine art to using Forex Broker bonuses in this way, but once mastered your overall risk will be greatly reduced, more so if the terms and conditions attached to such bonuses only require you to place a small volume of trades to turn your bonus funds into real money account credits.