Forex

The currency market and how to protect your account from risks

 

When starting to trade it must be borne in mind that this issue is one of the important things, which must be searched before taking the decision to trade.

While effective trading risk management provides currency traders with reduced losses that occur as a result of fluctuations in exchange rates.

We must also make it clear at the outset that the reason for losing a lot of money during trading is the rapid movement in the currency market.

Risk management is an essential component of a successful trading plan, without which a trader can lose all of his money.

Thus, having a plan can make trading in the foreign exchange market safer.

But there are 3 things that traders could have done, and they can also ensure that their trading accounts survive.

 

Determine guaranteed stop orders

The trader, upon entering and performing the trading process, must determine the size of the deal.

He then sets the stop loss points, which is an order in which the price at which the position will be closed when taking the direction of the loss is determined.

While most Forex traders use stop loss orders that are placed immediately after the establishment of the deal.

So that trader uses this method to reduce the risks resulting from the rapid movement in the currency market.

Those who use guaranteed stopping points can protect them from the “black swan” move in the Forex market.

Because the black swan theory is a theory that indicates the difficulty in predicting sudden events.

However, when traders use normal stops, they may slip.

This makes their position worse than traders who use guaranteed stops in the foreign exchange market.

 

Risk in trading and leverage

The majority of Forex companies offer very strong leverage, but you should not use them.

But when trading with leverage, you can open large deals by investing a relatively small amount.

This is a double-edged sword because using it will maximize your profit and push you to inflate your loss as well.

Therefore a trader should use the least amount of leverage possible, and determine how much you can afford when using it.

 

Control feelings of greed upon profit

When taking profits, greed is often avoided for traders when making profitable trades.

As they achieve their goals but do not feel satisfied enough and want more profits, they do not stick to the plan to avoid risks and avoid losses.

For example,

 when a trader has a long position and trades in it to the planned profit taking level.

However, greed can control it by changing the set profit-taking order in the hope that the market will rise significantly.

In this case, the market price may not reach the profit-taking level again.

In this case, the trader can lose or liquidate the deal to achieve a gross profit that is less than what could be achieved when adhering to the plan

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