Basics of risk management in Forex trading

Any activity on the exchange involves certain risks. With the right approach to work, you can significantly reduce the level of threats. A set of rules to reduce losses on the stock exchange is called risk management.

Here are the basic rules to follow:

  • choose a medium-term trend for safe trading;
  • it is necessary to buy shares on the rebound at the bottom of the channel, to sell – on the rebound at the top;
  • stop loss technique is mandatory;
  • the ideal ratio of potential losses and potential profits is 1: 3;
  • it is always necessary to work according to plan and to deviate from it only in the most critical situations;
  • at the conclusion of transactions, it is required to act systematically and systematically, without making impulsive decisions;
  • do not deviate from the capital management plan;
  • use risk diversification methods, simultaneously open positions in different currencies, create long-term and short-term positions;
  • never make important decisions on the eve of closing;
  • all forecasts should be critical, check the statistical data obtained several times;
  • Avoid too short positions.

Following these simple rules, you can significantly reduce the threat of large financial losses in the framework of risk management.

WP Post Author