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Friday, 18 January 2019

7 Tips For Forex Financial Management


It takes a lot of patience to be successful in the field of forex, in addition to proper knowledge, it can also be quickly adapted to the market situation, and a number of other qualities. Similarly, for success in forex trading, traders need a complete and mature trading plan.

The complete plan must consist of when to enter, when to exit, the selected currency, also to manage finances when trading. The problem is, many traders are a little indifferent to financial governance, even though this is very crucial to help their success during their career in the forex field.

The reason why many traders lose money is because they lack knowledge so that traders are indifferent to the principles of financial management. Forex market has a high level of volatility, and financial management is one aspect that supports success.

# 1. Calculate capital risk

Preferably, calculate all the risks that might arise when trading. Such as the opportunity to get a lower profit than the potential profit that can be obtained, avoid trading. Traders can use a trading calculator to calculate exactly how many risks might be obtained from a single trade.

Most financial management departs from this, namely calculating the risk and profit ratios. For example, the total capital risk that a trader has can determine position sizing. In general, the overall capital risk in a trading account should be no more than 2%.

For each trade, the ideal risk is no more than 1% of trading capital. For this one, traders must implement risk management in each planned strategy. This is needed to ensure that traders can manage risk management properly.

# 2. Avoid aggressive trading

Especially for beginner traders, maybe this is one of the big mistakes that is often made, namely trading too aggressively. In fact, only a small defeat can shake the capital of a trading account, which if calculated as a whole will give a lot of risk.

The best way to find out the right level of risk is to adjust the position sizing with the volatility of the currency being traded. But always remember, the higher the volatility of the currency, just use a small position sizing. If volatility is low, then the opposite applies.

# 3. Realistic thinking

One thing that makes new traders often aggressive in the market is because their expectations tend to be unrealistic. This kind of trader must be trapped with the idea that forex is easy. Through aggressive trading, traders think they can get ROI as soon as possible.

In fact, the best trader is not calculated from how fast the profit is collected, but how consistently the profit earned. Determining more realistic goals and maintaining the trading approach used is the best way to gain profits from forex.

# 4. Admit if it's wrong

The golden rule in the forex business is as much profit as possible and as little as possible. Such a market turns out to be not as expected, it is very important to get out as soon as possible if the strategy used does not fit the situation in the market. This condition is very much related to trading psychology.

It has become a basic human attitude if it has a tendency to try to reverse the losing situation to win. But this step is actually a big mistake, and will give another defeat. That is why, traders cannot control the market. Simple, because of his ego!

# 5. Use stop-loss

One important tip of forex financial management is to use stop-loss in various trading situations. Stop-loss orders will protect capital placed in the market. Because there is always a chance of losing trading, set stop-loss with no more than 2% of the total trading accounts owned.

Assume that in a trading account there is a capital of USD 20,000, and stop-loss is placed 40 pips on each trade. So, if the trading results are not appropriate, the maximum defeat that can be obtained is only USD 80. But, where stop-loss will be placed, it depends entirely on the character and experience of the trader.

There are several kinds of order stops in forex, including margin stop, stop chart, volatility stop, and equity stop. A good financial management strategy is the most basic way to survive. This can be obtained through the use of several types of stop-loss orders.

# 6. Take a break

At a certain point, the trader must have experienced a severe defeat which made the capital in the trading account almost exhausted. But there must be a temptation after a big defeat to immediately open the next trade to restore the lost capital before. But this is a big problem.

A situation like this is the worst time for trading because it will only increase trading risk when the risk of the account is being depressed. It should be, consider reducing the risk of experiencing a losing streak, taking a break from the goods for a moment to rest and evaluate.

# 7. Understand leverage

Leverage gives traders the opportunity to earn multiple profits from small trading capital, while simultaneously increasing risk opportunity. Leverage is the most useful tool, and it is very important to understand the leverage size provided by the broker because of the large risk.

The broker gives leverage into the account, allowing trading with large profits. But it's good to be careful if you want to use this facility. For example, 1: 200 leverage for a USD 400 account, meaning that traders can open trading positions up to USD 80,000. If the leverage is 1: 500, that means the maximum trading reaches USD 200,000.

The minus side, traders will be more easily exposed to risk if they take large leverage. For beginners, it's best to avoid this. Consider using leverage if you really understand the risk of loss. The outline, besides helping, leverage is sometimes detrimental.

Read to The Best Simple and profitable Forex Simple Strategy Techniques Tips
Read to How to Propit in 5 minutes in Binary Options

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