5 Tips To Improve Risk Management In Forex

Forex is an amazing investment. But that’s not what we’d be talking about today. If you have been reading this blog for some time, you’ve already came across with all good characteristics of forex trading. While this industry is indeed extremely profitable, it can also be very risky.

Let me put this way: there’s nothing wrong with risk, if you understand how to manage it. And yes, it’s possible to manage risk. Nope, you don’t have to be an expert mathematician to do it. In fact, we’re bringing you five super easy ways to tune yourself for risk management.

1. Have a strategy and stick to it

We cannot emphasize this enough. Trading is not a casino. You cannot enter whenever it pleases you, place a random order and wait for huge returns. That’s not the way things work around here. Instead, you have to stay on track with a trading strategy of your choice in order to better control your capital, reduce risk exposure and potentially increase return opportunities.

By sticking to your strategy, you’re building mental strength, which comes handy in an industry that emotions are not welcomed and tend to cost you lots of money. Also, writing down what you’ve done at the end of each session, it will help you feel under control.

2. Going well? Take profits

Don’t expect to take the absolute gain out of one position. If the price action goes in your favor and there are substantial profits to secure, hit the trigger and take them now. Waiting for the limits it’s not only out of your league as a retail investors, it’s also a totally unnecessary risk. You don’t even have to close a whole position, you can simply execute half of it if things are going right and leave the rest wait a little longer.

3. Going wrong? Step aside

On the contrary, if trades are not going any good these days, you should consider (for the sake of your account) to take some time off. Let the keyboard and your brain cool down for a while. There’s no shame on it. The more time you spend trying to figure out “what’s wrong with yourself”, the more emotionally exposed to failure you are. Stop. Make a clear break, change the tune and return with a fresh vision and full battery.

4. Withdraw some money

Unlike the previous one, you’d love this one. Believe it or not, taking some money off your profits will prevent you from being exposed to huge risk. Why? When money starts to pile up in your account, you simply feel more comfortable with the idea of opening a larger amount of positions or increasing the size of the ones you’ve already got.

5. Keep an eye on your orders

Always double check your orders. Don’t be too confident on your mind or your fingers. Whenever you place a new order, check that values are correct, the size is accurate and stop loss and take profits orders are well determined. Avoid human mistakes, avoid risk.