Two Important Things Except Open Forex Position

Forex tutorial – if you want to hold the position for a very long time, then you need to understand two things:

Risk management

Level close position.

If you have a forex trading account with $ 1000 or $ 1,000,000 then both of the above should be noted before the trade done.

Why are these two things important?

I will try to describe some of my mistakes when starting forex trading. Perhaps after reading this, you will be increasingly understand how importance because if has entered into this situation then this experience will be important or if you haven't yet, you will soon experience it.

When I started the transaction and learning, there are times when I am so sure that trade will generate profits as confidence is high going to obscure the sense of risk on forex trading.

Now, with power without a moment of loss will continue to increase to exceed comfort levels and finally make big loss! Stop loss is hit with large losses.

Right now I am struggling to re-create an account forex trading because just suffered huge losses.

How the risk per trade?

First decide how much you feel comfortable to take risks of loss on each trade that you do. You need to specify, how many% (percentage) the risk per trade.

Let's make some calculations, if you have the risk of only 2% of your account on each trade, each 50 consecutive transactions defeat will remove funds on the trading account is $ 10,000.

If you have the risk of 5%, then the funds on the trading account will be depleted by a whopping 20 times in a row. If the risk of 10% on each individual trade then you need only 10 times in a row suffered a trade loss.

"Can you see the pattern here? the more you have high risk per trade on each ".

If you have funds in your account is $ 5,000 then the 2% risk per trade, this means the same as risk $ 100 per trade. With the risk of 5%, You risk the $ 250 per trade.

With the risk of 10% then the risk per trade is $ 500.

Personally I traded with risk from anywhere between 1% to 5%. With the risk of 5%per transaction for me it was a suicide.

Remember, the more you risk, the more quickly your forex trading account funds will be lost.

Here's what I do:

I have a risk of daily trade between 1% to 5%.

If I lose 5% on this day, then I would stop trading.

When I trade on the day tomorrow, I will be dealing with the risk trade is 1% or 2%per day.

I would trade with little risk to the original account.

Why is 2% for risk management? I have bought and read and books about risk management for forex trading and many of the books it says that we should take the risk of 2% per trade.

Close position strategy

Before you open a position, you must have a plan how to close position.

You'll close position when:

Stop loss hit

Take profit targets because the profits taxable

Trailing stop loss hit

Close a position when the loss was too much.

Close position when viewing an entry signal trade contrary to the open position.

Some traders have a strategy or close position

So, it is important for us to know both of the above so we can use it on forex transactions daily.