Risk management in forex trading is a multi-step process that begins with the identification, assessment and control of the threats that are directly or indirectly posed to the trading account, capital or estimated profit returns in a trade.
Fuad Ahmed, a currency trading expert has compiled for his readers a list of tips that they can follow to minimize the risk factor in every trade. The tips are given in the form of an infographic, so the readers, through the visual image can easily grasp the essence and remember it.
The first step of risk management according to Fuad Ahmed is the measurement of risk beforehand followed by the strategy to never overtrade. The next step is to always make a trading plan and go by it. The best technique to avoid the risk in any kind of trading is to study the market trends and follow them, this saves the trader from any unforeseen mishap and prepares him for the worst.
While all the initial steps are ensured to be taken, the next is to check by the trader is the placement of stop loss, when putting a limit, a trader shouldn’t risk more than 1-2% of the total value of his account. This saves him from risks of losing a huge amount of money in a single trade. Fuad Ahmed’s piece of advice to his clients is to not trade a big lot and always remain prepared for the right time to trade, as a trade placed at a wrong time can be of difficult consequences.
Forex brokers usually offer their traders a leverage so high, that it causes them a fortune to repay in case they lose the money. therefore, it’s recommended that a small amount of leverage be taken on every trade.
With everything technical said and done, one thing that can completely devastate a trader’s life is his psychological state, Fuad Ahmed advises the traders to minimize the risk of losing money by remaining stress-free and composed when placing a trade and not panic at the time of order.
If these tips and guidelines are followed, there is a great possibility that a trader will never lose money in forex trading.
Infograhic by: Fuad Ahmed
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<strong>Infographic by- <a href=http://www.fuad-ahmed.com/>Fuad Ahmed Currency Trading Expert</a></strong>