Forex trading involves high risks. The probability of a complete loss of capital is an important issue not only for beginners but also for experienced traders. To reduce the risks, each market participant should develop a set of rules, and always, under all circumstances, follow them.
This is especially important for beginners, who is badly oriented in terms of trading and are not always able to cope with their own emotions.
Such a complex of protective rules calls money management. In the beginning, not having his own experience and market views, the trader can take advantage of schemes, developed by more experienced colleagues.
The main thing that trader needs first of all it’s a quality Forex strategy. After developing a personal trading strategy, a trader should always follow it, just occasionally adjusting the strategy according to market circumstances.
Establishing stop-loss and take-profit orders will help to minimize risk of loss of capital. Even if the trader forgets about caution, the program will automatically interrupt trading.
An effective way to reduce risks is diversification. It is when all of the assets is evenly distributed between the different transactions, thus not investing the entire deposit in one lot, even if it promises almost 100% gain.
Regardless of the conditions and Forex experiences, it is desirable to trade only in the direction of the trend. In this case, the probability of complete loss of capital is significantly reduced. In the event that some deal turned to a loss, the trader should refrain from the desire to immediately open a new one.
Most likely, this will result in an even greater loss since negative emotions will not allow you to sensibly assess the situation. For this reason, it is not recommended for new traders to open another order in the presence of already opened but losing deal.
In conclusion, it should be noted that a huge role in the Forex trading plays such a subjective factor as the emotions, so you need to start trading in a calm and balanced state of mind.