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Risk management before profit taking


Risk management before profit taking

Risk is a major part of the trading process, accepting risk, understanding its causes and focusing on managing it is one of the most important factors for success in managing your trades or trades, but most novice and inexperienced traders focus only on profits based on the idea that trading is only a way to earn fast without managing risk and this exposes them in a way. Big on losses, forgetting the monthly rule that “on the level of risk comes profits”, which does not mean that your risk increases in desire for more profits, then trading will turn into a gamble, but start by focusing on protecting what you have and at the same time give yourself an opportunity to make a profit.

 Discipline and patience

Patience and dream are among the characteristics that a successful trader always possesses, and this is what makes him make correct investment decisions that are not impulsive. There is no successful strategy or approach that works all the time and brings profits, the main thing for success in trading is discipline regardless of how it is invested, discipline in preparing the trading plan and implementing it as required and according to what achieves your goals in this trading process that leads to profit.

Objectivity in dealing with the market

One of the qualities that characterizes a successful trader is to look realistically and objectively on the market, and on the basis of that he can set correct expectations that are closer to reality, in addition to being familiar with all the information you need to form a clearer picture of what you think about trading in it, and the trader must be organized and resolute in decisions, Which helps to arrange your investments and know the success rate of each deal. Also, it can trace the failure and success ratios to total capital.

About trading in the financial markets

As we trade in our daily life in the different commodity markets, we can also trade in different financial markets with the same principle, but before explaining the principle of trading in the financial markets, let us first know what the financial markets are, there are several types of major financial markets or their derivatives, and the most important main types can be summarized. Below:

Capital markets, including the stock market and the bond market: When we apply the principle of trading in the stock market for example, trading will be a matter of buying a share – or a small part of a company for a certain amount of money, and if the value of those shares increases, money is earned by selling them again at a price. Top. In short, this will be trading buying something at one price and selling it again at another price in the hope that the selling price will be higher in order to make profits.

Foreign exchange market or what is known as the forex market: The concept of trading – exchanging one thing for another – applies in the foreign exchange market, where one currency is exchanged for another, and if the price of the currency being purchased rises, the trader can make a profit when reselling it at a higher price, and vice versa. Here, too, we apply the principle of trading, which is to buy a currency at a specific price and then sell it at a different price in the hope that the price will rise.

Trading in the currency market differs somewhat from the rest of the financial markets because of the mechanism of work in it, the trading system or what is known as the pairs system that is somewhat similar to the barter system – we also talked about to you in detail in topics, what is forex, and the pairs system in the currency market.

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