You must know Currency Trading risk before start online trading as Forex market is the biggest market of the world because total trading in this market amounts to more than a trillion dollars everyday and this is the main reason of attraction for many traders. Beginners see Forex Trading as the great money earning opportunity but the fact is that there is too much risk also involved in this market and beginners should step in this market with caution. A study reveals that about 90% of Forex traders are losers. Traders should not step in this market without applying risk management principles otherwise final result for them will only be loss. So if you want to earn only profit without loosing all your money then learn risk management principles before trading with real money.
What Currency Trading risks you involved in the Forex Market
Your initial investment (also called margin) is your risk. Though you can earn unlimited profit on your investment but you may lose all your initial investment with in few hours. So an important suggestion for the Forex traders and especially for the beginners is never to risk money more than your capability to lose. Forex Trading should be a part of your investment but it should not only be your investment.
To save yourself from losses, you should follow certain risk management principles.
Don’t take big leverages to decrease your Currency Trading risk
Many brokers of the Forex market offer 100:1 leverage. This means that with $100, you can open a position of $10,000. If the value of your position goes to $10,200 then your profit is $200. It is good to hear that you can make double of your investment with in few days or may be few hours but now see the other side of it, if the value of your position goes below to $9,900 then all your investment is gone. So if it’s easy to double or triple your money then it’s also very easy to return home without a shirt to cover your body. The lesson you should learn is don’t take big leverages because the chances of going in loss is same as making profit. you can read Wall street journal about currency trading risk .
Don’t fail in following Stop-Loss
Trading without stop-loss is like jumping from a plane without taking a parachute. Stop-loss is very important in the Forex Trading and you should never fail to follow stop-loss. Once you place stop-loss then never bring it down otherwise it will be like jumping from a plane with parachute but never open it.
Make trend your friend
If you don’t have the capability to hold a position for years then don’t go against the trend. Going against the trend may push you to loss. Trading with trend will minimize your risk.
Continue your education
Never think that you are fully educated and you don’t need to learn forex more because it’s a wrong concept. New stories are always seen and based on it new concepts develop and to be a successful trader you should have knowledge of the concepts.
Use Latest Software
Always use latest versions of software for your Forex Trading because an older version may not provide you all the features you need to become a successful Forex trader.
So following all the tips suggested Fxstay, you will minimize your risk of loss.