Forex Risk Management

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This section covers all aspects of risk management. What is risk, drawdown, stop loss placement. Trading using leverage. How to define trading objectives. How objectives are related to the optimal position size and account balance, how position size affects the overall expected drawdown of the system, position sizing strategies. We cover what fractional trading is How optimal fraction is the best and the worst thing you can do. we cover also different alternatives to optimal fraction trading.

Measuring Trade Risk Levels with VaR and CVaR

Quantifying risk when trading has become one of the biggest concerns (or at least should be) as traders. The volatility, volatility of exchange rates,...

A Risk Management Model to Forecast the Margin Level

Margin call and Stop Out are some of the trading conditions that are infallibly indicated in the trading account conditions. Margin call is a...

Best Trading Position Part 3 – Risk in Parallel Trades

If you are reading this article, you must be serious about trading. Did you know that curiosity and eagerness to learn are the two...

How to Avoid the Forex Drawdown Trap and Come Out On...

Drawdown is an extremely important benchmark of one’s development as a forex trader which is why it is the topic of today’s article. Shortly...

Are You Taking On Too Much Risk While Trading?

One of the phrases that you have probably heard the most since starting out with trading is risk management, but what does that actually...

Position Size Risk and System Analysis

Introduction Some authors label this topic as Money Management or Risk Management, but this misses the point. Money Management doesn't tell much about what it does, and Risk Management seems

How to Mitigate Forex Trading Risks and Profit More

Risk, something that people either love or hate, it is something that is there in everything that we do, every single day. When it...

How to Deal With Overexposure Like A Professional

Risk management in forex is of extreme importance and traders around the world have often struggled with overexposing themselves in one currency. We will address this issue using our trading system as a practical example. Exceeding the 2% risk limit (according to our risk management using our algorithm structure from previous articles) without having any awareness of how these oversights occur is almost every beginner trader’s mistake. These scenarios are frequently driven by a news event or some other occurrence that affects the specific currency they are trading, which consequently leads to an enormous loss. These losses can at times be so grave that they completely extinguish a trader’s account or erase several-month-long work despite traders’ initial efforts to maintain the risk at 2%. Interestingly enough, it typically happens that most trader’s individual trades are properly set at 2% when the exposure to only one of those currencies turns out to be increasingly higher. Today we are going to assess risk from several real-life situations and discuss them in order to gain some insight into how to manage risk better. 

Tips for Traders Wanting to Take on Larger Positions

Thinking of increasing your position sizes to bring in more profits? It’s true that this can help put more money in your pocket but...

Ways to Keep Your FX Trade Earnings Consistent

Once you start making money as a forex trader, you’ll never want it to stop. Sadly, none of us are safe from trading fallout...

How to Deal with Losing Streaks and Drawdowns

One of the aspects of being a professional trader for which many are unprepared is the depressing periods of drawdowns in forex. Losing streaks...

The 4 Most Common Errors in Capital Management

One of the driving forces behind forex traders is being able to escape their monotonous daily routines. We all fantasize about quitting our conventional...

The Importance of Risk-Reward Management in Forex

Trading can be fun, mentally stimulating, and beneficial in several ways. But you shouldn’t confuse it with a casino machine. There are people addicted to trading, and many of them surprisingly have some sort of structured plan. The problem is that when managing their capital, these traders tend to fix the risks of their operations based on how they feel at the time. This type of placement of transactions with random sizes causes the trader to have no control and usually to be placed in situations of extreme exposure of his capital, which is dangerous and stressful.

What is Your Actual Trade Risk Tolerance?

While there are many possible pieces of the puzzle that you can put together to earn money, certainly the most important general area is...

Where Do Forex Trading Risks Actually Come From?

Have you ever wondered where trading risks are actually rooted? What causes risk, and even more importantly, what is causing losses? Spend a few...

How Much Should You Risk on Each Forex Trade?

When it comes to forex trading, it’s a good idea to take advice from seasoned professionals so that we can avoid learning hard lessons...

Why You Should Only Risk 1% Per Trade

Some of the best advice that you can be given is to do with your risk management, risk management is often seen as the...

Big Trading Mistakes That Will Hurt Your Account Balance

Seasoned forex traders will tell you that there are several mistakes that can keep you from making money, or that could even cause you...

What’s Your Forex Risk-Tolerance?

In Forex, your risk tolerance refers to how much money you are willing to risk on each trade. In order to limit their losses,...

Helpful Habits To Help Reduce Your Trading Risks

Risk management, risk management, risk management, one of the most used phrases in trading, and for a good reason too. This can be based...

The Best Ways To Keep Your Forex Account Safe

Keeping your account safe is the number one rule when it comes to trading, there are plenty of different ways that you are able...

Monthly Returns: Reviewing and Goal Setting

What is the satisfying rate of return that we can achieve during a period of one month? Do we really need to aim for any kind of speedy results? There are a lot of different types of traders out there, experts, professionals, beginners, people who trade just for fun, or people who think they are doing just great so they want to set some goals for the future. That part of pursuing the goals could be very tricky in forex trading. Naturally, we all want to be better and more successful in areas like trading psychology, money management, and trade entries. We want to acquire wealth and knowledge as well but for that, we need discipline and a killer strategy. Before all of that, we need to achieve patience, because that skill could be our most powerful weapon in most cases.

Why Scaling in Might Be a Bad Idea

If you are already in a winning trade, is there anything else you can do to father navigate its course to your benefit? One...

The Importance of Risk Management in Trading

While forex trading comes with several perks, like being your own boss, flexible hours, and the opportunity to become wealthy, the biggest drawback is the risk factor. There’s always a chance that you’ll lose money, no matter how well-educated you are. If you want to minimize your losses as much as possible, then it is crucial to have a good risk-management strategy working for you. Otherwise, you could quickly become one of the many beginners that walk away from trading for good.

Swing Trading ATR Risk Management Guide

Risk is essentially one of the crucial factors which have the power to endanger your entire forex trading career. Understanding how poor judgment and...

The Overlooked Risks Of FX Trading

There are some very obvious risks when it comes to trading, things like the loss of your account, the stresses that it can put...

Finding Your Own Personal Risk Reward Ratio

Risk and reward, how much you are willing to risk to win how much? We ask ourselves this sort of question every day in life. Often it is not something so obvious, taking the risk of crossing the road, there is a risk of getting hit and the reward is getting to the other side, the risks are actually pretty large, getting hit could be devastating, but we do things to help reduce the risks such as looking each way or only crossing at a designated crossing area. We need to make these decisions in trading too, but the outcomes are often much more complicated and so is the decision-making process that we use.

Trade At Your Own Risk, Not Others

One of the main lessons that any new trader gets is how to set out their risk management plans, there are a lot of...

Forex Risk Management Guide for Beginners

One of the most important elements of the trade is certainly risk management, even though it can be a neglected point. The traders need...

You May Lose Money When Trading, and Here’s Why…

You have most likely seen the warnings, every site to do with trading will have a little warning that tells you that trading is...

Forex Risk Ratios: A Different Perspective

This article will deal with ration and how they can be misleading. This is just advice coming from professional prop traders in the US....

Preparing Yourself For Trading Losses

Preparing for losses, it sounds a little counter-intuitive doesn’t it? Yet it is a vital part of trading, losses will happen, being prepared for...

These Are Some Of The Best Position Sizing Techniques You Should...

Introduction In our previous article, we addressed the concept of position sizing, drawdown, and techniques. Now we extend this discussion and look at other crucial aspects of position sizing, which

Basics of Risk To Reward Ratio In Forex Trading

Introduction The Risk to Reward Ratio is one of the most critical aspects of risk management in Forex trading. Traders with a clear understanding of what RRR is can improve

How to determine if your Trading System shows Dependency

How to determine Dependency in your Trading System As we have explained in our previous article How to be sure your trading strategy is a winner, traders usually apply position

How Be Sure your Trading Strategy is a Winner?

To evaluate, the quality of a strategy is an old quest, and its answer has to do with gambling theory, although it can apply to any process in which the

Basic Math Skills Traders Needs – Average and Chevyshev’s Inequality Explained!

Most of the people wanting to profit from the Financial Markets think that the secret to success lies in knowing the price turns to start a new trend and also