10 Forex Risk Management Tips presented by The Forex Secret.

1. 10 Forex Risk
Management
Tips
Presented by The Forex
Secret

2. 1. Educate yourself about Forex risk
and trading
 If you are just starting out, you will need to educate yourself.
 One attitude that will help is to approach Forex trading just as you would
with any career, because that's what it is.
 The good news is that there are a wide range of educational resources that
can help, including Forex articles, videos and webinars.

3. 2. Manage your Forex risk with a
stop loss
A stop loss is a tool to protect your trades from unexpected shifts in the
market.
 Simply, it is a predefined price at which your trade will automatically close.
 So if you open a trade in the hope that an asset will increase in value, and it
decreases, when the asset hits your stop loss price, the trade will close and it
will prevent further losses.

4. 3. Don't risk more than you can
afford to lose
One of the fundamental rules of risk management in the Forex market is that
you should never risk more than you can afford to lose.
 That being said, this mistake is extremely common, especially among Forex
traders just starting out.
 The Forex market is highly unpredictable, so traders who are willing to put in
more than they can actually afford make themselves very vulnerable to Forex
risks.

5. 4. Manage Forex risk by limiting
your use of leverage
Linked to the previous Forex risk management tip is limiting your use of
leverage.
 Leverage, in a nutshell, offers you the opportunity to magnify profits made
from your trading account, but it also increases the potential for risk
 For example: leverage of 1:200 on a $400 account means that you can place a
trade for up $80,000 ($400 x 200).

6. 5. Have realistic profit expectations
to manage risk
One of the reasons that new traders are overly aggressive is because their
expectations are not realistic.
 They may think that aggressive trading will help them make a return on their
investment more quickly.
 However, the best traders make steady returns. Setting realistic goals and
maintaining a conservative approach is the right way to start trading.

7. 6. Manage Forex risk with take
profits
Once you have clear expectations, one way to secure your profits is by using a
take profit.
 This is a similar tool to a stop loss, but with the opposite purpose - while a
stop loss is designed to automatically close trades to prevent further losses, a
take profit is designed to automatically close trades when they hit a certain
profit level.

8. 7: Have a Forex trading plan for
better risk management
To properly manage your Forex risk, you need a trading plan that outlines:
 When you will open a trade
 When you will close it
 Your minimum reward-to-risk ratio
 The percentage of your account you are willing to risk per trade
 And more.

9. 8. Manage risk by being prepared
for the worst
 No one can predict the Forex market, but we do have plenty of evidence from
the past of how the markets react in certain situations.
 What has happened before may not be repeated, but it does show what is
possible.
 Therefore, it's important to look at the history of the currency pair you are
trading.

10. 9. Manage Forex risk by managing
your emotions
 If you cannot control your emotions, you won't be able to reach a position
where you can achieve the profits you want from trading.
 Why? Because emotional traders struggle to stick to trading rules and
strategies.
 Traders who are overly stubborn may not exit losing trades quickly enough,
because they expect the market to turn in their favor.

11. 10. Diversify your Forex portfolio to
manage risk
 A classic risk management rule is not to put all your eggs in one basket, and
Forex is no exception.
 By having a diverse range of investments, you protect yourself in cases where
one market might drop - the drop will be compensated for by other markets
that are experiencing stronger performance.

12. Thank You
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