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Managing Risk when Forex Trading

STOP! BEFORE YOU BEGIN TRADING FOREX – Successful trading is about managing risk, period.

If you are thinking about trading, are new to trading or even if you are an experienced trader – ask yourself this question: How much cash should I place on a trade?. If you cannot answer with a mathematically generated risk-based formula, then you really should not be trading. If you are trading amounts based on what you can afford – or what feels right then you should not place that trade. You need to learn how to trade size. You could consider getting some training from Knowledge to Action, a forex trading training company.

How to Trade Size

Trading is a numbers game. Every single trade you place must be considered as “a trade in a sea of many trades”. Some trades will work out, others will not – that’s life.

Your job is to make sure that the ones that do not work out don’t hit your account like a freight train – meaning they must be risk managed. You must set the game up to win. Losing trades should nibble at your capital, not shatter it after a string of losers. It is not in your winning trades that fortunes are made; it is in the protection of your capital against heavy draw downs where winning traders are made.

One of the biggest causes of failure amongst traders therefore is the inability to manage risk and control losses.

Remember this: Huge Money is Only Made When a Little Money is Risked The Right Way and Commonly Used Wrong Way to Determine the Size of Your Trade

Here’s my first tip:

Handling Losses – if your trade drops below a pre-defined level, you must exit – no hesitation. Sure it will hurt but as a successful trader you know that this is part of trading – consider it learning capital and GET USED TO IT!

Being a successful investor or trader isn’t simply about winning more trades than you lose. It’s about controlling your losses so that the profits from your wins will outweigh the losing trades.

Don’t believe all you hear –  Read this Article …. on Knowledge to Action

Knowledge to Action has published 4 educational videos on Forex Trading. The videos provide a wealth of information on Forex trading for people new to Forex traders as well as the “old salts” of trading. The video series is over 5 hours long and is provided for FREE and NO strings attached.  To find out more – Read this Article.

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