Think about what levels you should go out of if you expect the opposite. By doing so, you’ll know when to quit, and you’ll have discipline in your trades to make the most of your profit without breaking your account. By thinking this way, you will be able to quantify before you open a position what your risk-return is. In Giga FX Trading options you risk nothing
Use Stop Losses
Using a stop loss on each position you open is a good risk management tip. Stop-loss orders are like protection or armor against unexpected market movements. Since there is always the possibility of losing money, set your stop losses to not exceed more than $ 2 of your capital in each trade.
For example, if you have a trading capital of 20,000 euros, your stop loss should be 40 pips per position, so if a position goes against you, all you will lose if the stop loss is activated will be 80 euros.
A good money management strategy is important to survive. Always remember that survival is your highest priority – and profits come later. One of the most relevant forex techniques involves preventing large losses. By using a stop loss, you can prevent losing a lot of money.
Don’t trade immediately after losing money
- At one point, you will end up on a big loss or lose a large portion of your capital. There is a temptation after a big loss to try to open a new position to get back some of the money back. But, there is a very big problem. Increasing risk when you have lost part of your capital is the worst strategy. This is called revenge trading and most often ends up with an even bigger loss.
- Instead, consider reducing the size of your positions after several losses or take a break until you can identify a low-risk trade.
Respect and Understand Leverage
Leverage offers the opportunity to increase your profits by risking the available capital, but also increases the potential for risk. It’s a useful tool, but at the same time, it’s important to understand the size of your risk exposure. Depending on your experience or risk, the forex broker may give you more or less leverage.