Minimize Risk In Forex Trading Through Risk Management

Minimizing risk while trading is a matter that must be understood for every trader because forex trading is a very risky business. The rate of loss is greater than the amount of profit can be obtained in the forex trading that is why 95 % of traders around the world are losers .

Trading is becoming a very promising business when we hear of the article on the Internet that forex trading can make us become a wealthy man . We can obtain abundant of Money in just one click on the mouse and wait for us to profit in our trading position without the need to go anywhere to work just need to sit in front of computer alone and you can earn large amount of money. Such was certainly the lure that you find and make you become very interested to becoming a trader . But in the end you will realize that trading is not something easy to do , make money from a market that is very unpredictable is risky . Maybe after 2 years learn trading well then you will understand that , as I already feel and probably faster than it is a good thing for your trading progress because when you understand that the market is unpredictable and very high risk, You will be more careful in analyzing your trading .

We can not eliminate the risks inherent in trading but the risk can be minimized or reduced so that the resilience of our trading funds will be maintained . There are several things that make forex trading is becoming a very risky as follows :

1 . Lucky or Gambling

At the start of trading you will definitely experience these moment. The moment when you trade and do not understand the analysis correctly and you just follow your natural instincts . You just do the order according to your feelings and then you get profit of your order and you think that trading is East for you. Your action above is similar to gambling that rely solely on luck of win in a gambling. But in forex trading you need more than just a luck and in the end you will experience a continuous of loss , so many times of loss repeteadly when you trades without going through an analysis first. When you begin to understand that your trading will be better than before.

2 . Leverage

There ares so many professional traders who said that leverage was a major source of risk in forex Trading and this is like a double-edged sword that can be used to kill enemies but at the same time can also injure their owners . Such is the function of the leverage that can make you get to the lot of profit but it can also make you lose a huge of money too. In general there are several types of leverage that can be chosen by the trader ranging from 1 : 1 to 1 : 1000 . Greater leverage you use , the greater the risk of trading that you can receive. Therefore when you are still a beginner You required to use the leverage of below 1 : 500 and when you have understand the function of leverage well I think you also need to try to use the highest leverage 1 : 1000 so you will be Bette in understanding the differences of each leverage and the influence to your trading psychology.

3 . Understanding the risks of each trading positions

By understanding the risk of any trading positions that you make give you better understanding in control of your margin . You need to know that the control of the your margin health will be highly influenced by the leverage you use , and how well your trading psychology . When you are not understading well about that so you just will always making a high risked trading. You not only need to know how much profit you may get but you also need to know how many losses you might receive so that the calculation of the use of lots in your trade will be more scalable and it will be easier for you to raise and lower your trading risk through the your lots of trading.

Trade is an investment that is done not by avoiding risk but by controlling risk . You dont need to find a way to avoid the risk in trading or looking for ways to trade without getting any loss because it so is impossible to do but thing thing that you need to do is to control risk through good money management .

I think it has enough for the article about  how to minimize risk in trading from making a good analysis, leverage, and understading risk in each trade. Hopefully this article can be useful for you and thank for visiting.

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