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2010-07-15

The most important strategies to reduce the risk of forex trading


The most important strategies to reduce the risk of forex trading:-

Forex market is characterized by many factors from other markets! The speed, volatility, and enormous size of the Forex market different from any other market in the world of finance. Therefore, investors should be very careful, the Forex market can not control it. Where the increased risk entails chances for a higher profit / loss.

The currency market nature highly speculative and volatile. Each currency are subject to change value of the currency of high-cost to a currency with low price (compared to other currencies) during the days, hours, or sometimes within minutes. This natural unpredictable is what attracts an investor to trade and investment in the currency market.

But the question arises, what is the extent of loss that could be exposed to the investor in the forex market after coming out of the deal. If the investor understand the risks and take appropriate steps to avoid them? . It is clear that the size of the loss greatly reduced if the investor was able to understand the risks in Forex Trading and took the appropriate steps to avoid them.

Forex market is fraught with risks that stem from multiple factors, including:

* Corrections unexpected currency fluctuations.
* Huge differences in rates of exchange Alojunb. J
* Volatile markets provide opportunities for profit, or increase the risk.
* Payments lost.
* Confirm late payments and income.
* Deviation between the currents bank received and the contract price

Therefore, the investor must be vigilant to these risks, to be able to avoid them.

There are several steps the investor take to reduce this risk:

1. Defined time frame for trading
Forex market offers investors many possibilities for trading, so the investor to determine the type of trade that it intends to follow, and the time frame for trade (trade daily or long-term trade). Trading a time frame helps the investor to determine the major brands.

2. Selection of technical indicators to determine the direction of changes in rates of exchange
Determine the direction of the changing currency rates early, is one of the most important objectives of the investor must therefore be that the use of indicators and techniques that help the investor to reach this goal. These indicators could rely on technical analysis of the currency market, and Fibonacci Index.

3. Determine the size of potential losses.
Is a successful merchant who think within the limits of its loss before thinking of profits. When you develop your trading system then you have to determine the risk they are subjected to, and determine the size of loss that can afford it. But at the same time does not make the danger significantly.

4. Control risk by stop loss orders
After determining the size of the losses that can run the risk of the move was to identify the point of entry and exit points as well as commands for trade.
Stop-loss orders allow investors to determine the points for the losers out of the deal. For example, when you do a deal to sell a currency pair, the investor should determine the stop loss at a higher price than the current market price. In the case of a long position, stop loss is set at less than the current market price. Stop-loss orders help investors control risk and determine the percentage of loss.

5. Out of the foreign exchange market (Forex) profit targets
Orders to determine the gain, allowing the investor to exit the Forex market when the market reaches a predetermined profit objectives. For example, when you do a deal to sell a currency pair, the investor should set a goal of profit in advance of this system, this goal (in this case) is at a lower price than the current market price. Limit orders help create a disciplined trading methodology that allows traders to leave their computer without the need to follow the market all the time.

6. Type in your strategy and follow the system strictly
This step is the most important business After having define your strategy, type and follow your rules and has consistently adhered to and applied by the characteristics and discipline without fear or ignore or neglect.

How to test your strategy for?

The fastest way to test your strategy is to review the plans prior to the currency pair, for example, imagine you're in the market for real and made your decisions, and start your business imaginary according to your strategy, and record the results of every decision and be the Secretary does not cheat yourself, record your profits, and losses, and the percentage of your earnings, and the proportion of losses, and if you are happy outcome so go to the next test, a pilot program on trade real demo account and a merchant in the real market.

Merchant experimental system for at least two months, this will give you a better sense of how trading Bistrutijetk when the market moves.
Two months after the trade test will see if your strategy was good enough and bring you good results or not. According to these results has decided to open the account, whether real or that you are still in need of training and development of your strategy.

Where should I place my stop loss?

Traders should set stop loss orders close to the entry price to the deal. As a general rule, the investor is to put a stop loss, set at a loss to be 50% of the profit as possible to win it is by achieving the goals set by the. For example, if the investor a deal to buy oil-for-dollar and bought at 45.20 and set a goal to make a profit 47.20 (which won 200 points), the stop loss order should be 44.20, a loss of 50% of the 200 (100 points).
Command mode set for the profit or loss requires a realistic expectation of gains based on trading activity in the market and the time desired by the investor to hold the position.


Trading foreign currencies to allow trained and experienced investors great opportunities for profit. But before making the decision to enter the foreign exchange market, the investor should think about the desired result of investment and the level of expertise. Warning! Do not invest money you can not afford to lose.
Risk present in each transaction trading in currencies, there is always potential for changing political or economic, which may affect the price or liquidity of currency.

Also, the fact that the nature of trading foreign exchange is dependent on borrowing, this means that any market movement will have an equally proportional effect on your deposited funds. This might be for the investor, but on the other hand there is the possibility that the investor loses all the fiscal space is located in the account, and ask him to deposit additional funds to maintain the position. Strategies for stop loss orders or identified may reduce an investor's exposure to risk.

Forex foreign exchange technology related to all the time, the minimum of foreign currency the world to get the lowest price for foreign currency and to take every possible opportunity to implement a settlement or a deal.
Successful trading in the forex market, the investor should understand the fundamentals behind an investment and understand the technical analysis method. Indicate when each of the fundamental and technical signals to the same direction, the investor is not far from the outrageous profits if managed with good money management.

Possible to sum up the most important strategies for currency trading the following rules:

* Technical analysis relies on good understanding and to find points of support and resistance points as well as to understand and use the Fibonacci index.
* The investor should be organized, and to understand his motives for each decision.
* Determine the levels of stop loss and profit in the early stages.
* Discipline and commitment to stop-loss orders, no change of stop-loss order.
* When you buy, buy at a low price and when you sell, sell higher.
* General rule: in a bull market, buy for a long time (Long) or were neutral. In the market a bear for a short period (Short) or were neutral.

If you forget this rule and trade against the trend of the currency Vstzbb for yourself the suffering and psychological worries, and loss frequently. The trader can change the orders the trader for any number of times, whether withholding or loss of profits. The trader can also close the trade manually without a stop loss or profit

2 comments:

  1. I would like to suggest that you stick with the most recommended Forex broker: AvaTrade.

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