3 Effective Forex Risk Management Tips For Traders

In order to be able to trade forex for a living, you2) Never Risk More Than 3%: This is not a magic
definitely have to know proper risk management innumber but it is what I always stick to when I trade.
your trading.I usually decide how many lots to enter based on the
In fact, the main reason most traders who did notamount of risk my account can take and the stop
make it in this arena are because of their poor riskloss to set. For example: If you are having an
and money management. Therefore you need toaccount of $10,000, 3% of it will be $300 and if you
spend some time to learn the proper techniques toare trading a standard account where 1 pip
managing risk in your trades.represents $10, you will be able to enter 1 lot if your
Below are some risk management techniques that Istop loss is set at 30 pips. If your stop loss is set at
use:15 pips, you will be able to enter 2 lots instead.
1) Good Risk Reward Ratio: Having a good risk3) Movement of Stop Loss: Whenever I trade
reward ratio can be very crucial to your income. It ismultiple lots, I will usually exit 50% of my trades
best for you to aim for trades that are able towhen I attained certain profit level and then I will
produce at least a ratio of 1:2. This means that yourshift the stop loss of my remaining lots to the
possible profit in a trade is twice the possible loss.breakeven level. With this setting, I will still be
With this ratio, one winning trade is able to withstandprofitable even when the price move back and
2 losses which mean that you are still profitable evenstopped my remaining lots.
when you have a wining percentage of 50%. If youWith these 3 risk management tips above, you will
are able to trade with better ratio, you will be morebe able to trade profitably and become a full time
profitable in the long run.trader one day.