When trading currencies, risk management is extremely important as leverage can cut both ways. You may find that your winnings are accelerated, but rarely pay attention to the fact that the losses are accelerated by the very leverage that may have attracted you to Forex in the first place.
Below are three tips you may want to consider in your risk management strategy:
1 – Set limits: Know the maximum amount of money you can afford to lose. All Forex traders want to make profits from trading, but there will be times when traders lose in the market. This is something most, if not all traders experience at one point or another. Limitations on how much you are willing to lose on any given trade will help you avoid catastrophic losses. The platforms at Tradeview all have a feature called a stop-out which immediately freezes a trader’s account once they lose 100% of the amount initially deposited. This prevents them from going into negatives.
2- Be emotionless: Emotions can severely impact trading performance. If you become emotional, particularly when it’s a loss, you put yourself at an increased risk of making rash decisions which as a result can lead to even larger losses. Being that the forex market is an inanimate entity, it does not mix well with human emotions. Successful Forex traders move from one trade to the next without any thought of the previous trade.
3 – Have a safe enter/exit strategy: Less experienced Forex traders should make sure that they have enough liquidity and movement in the pairs they are trading so that they are able to get in and out of a trade safely.
At Tradeview, we encourage our traders to follow risk management procedures by providing the best platform as well as the best in-class account managers who are available 24/7 to help and support our clients at every stage of a trade. Learn how to use the Tradeview Risk Manager Tool by reading the step-by-step directions on our website.