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How to Manage Risk while Forex Trading

Discussion in 'Forex Basics Boot Camp - Fx Articles by Pharaoh' started by Pharaoh, May 12, 2008.

  1. fxkaldi

    fxkaldi Recruit

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    A very important lesson but overlooked by so many beginners!
    Being greedy can finish you quickly in Forex.
     
  2. F0r3x123

    F0r3x123 Recruit

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    Hi,
    Thank you for sharing with us this great post!
     
  3. F0r3x123

    F0r3x123 Recruit

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    One simple rule is: "Plan the trade and trade the plan".

    Do not get too excited when taking some money from market... this is the first step to try to get more money and change the rules of your trading system.
     
  4. Pharaoh

    Pharaoh 1st Lieutenant

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    I always went with "Don't Panic!" as the first rule. :p

    Having a reasonable risk management plan makes not panicking much easier.
     
  5. Joh

    Joh Master Sergeant

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    Thks Pharaoh -spot on!
     
  6. duderex

    duderex Private

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    to me, greed is a killer, and the risk management is the key to having better chances of success in Forex
     
  7. navyseal

    navyseal Private

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    I have lost 2 accounts because the greeding. When I take profit a lot, I tried to trade with hight volume and I thought I had never lost but I got it in one trade and it burned my account with about 100 pips reverse.

    So please think you can get lost everytrade and don't be greed or overloading.
     
  8. Whitesnake

    Whitesnake Corporal

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    Irrespective of our speculation skills it is always very much good for the traders to manage their trading risk efficiently by implementing suitable money management policies such as stop loss or hedging so that they do not risk the entire money in their trading account.
     
  9. pcbg007

    pcbg007 Private, 1st Class

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    But this chance computation can only be true if every factor that's causing price movement is fair and not weighted(not manipulated).

    Unfortunately, even the '1 chance in 1,048,576 to lose 20 consecutive trades' is happening to traders having accounts with some unscrupulous brokers using VDP and its equivalent.
     
  10. Pharaoh

    Pharaoh 1st Lieutenant

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    Those stats also assume a 50/50 chance of winning/losing each trade. That's a big assumption.

    Also, even at 50/50, blowing out 25-50% of your account is enough to make many traders increase their risks in order to recoup their losses. Then the risk goes up and the success rate usually plummets.
     

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