Is Forex trading risky?
Is forex trading risky?
Forex trading can be very risky if you don't use proper risk management.
Forex is considered to be one of the most risky forms of investing because of the availability of leverage.
New currency traders can minimize the risks by learning proper risk management and developing a solid trading plan.
Forex risk management can make the difference between your survival or sudden death with forex trading.
You can have the best trading system in the world and still fail without proper risk management.
Risk management is a combination of multiple ideas to control your trading risk.
It can be limiting your trade lot size, hedging, trading only during certain hours or days, or knowing when to take losses.
Risk management is one of the most key concepts to surviving as a forex trader. It is an easy concept to grasp for traders, but more difficult to actually apply.
Brokers in the industry like to talk about the benefits of using leverage and keep the focus off of the drawbacks. This causes traders to come to the trading platform with the mindset that they should be taking large risk and aim for the big bucks. It seems all too easy for those that have done it with a demo account, but once real money and emotions come in, things change. This is where true risk management is important.
One form of risk management is controlling your losses. Know when to cut your losses on a trade. You can use a hard stop or a mental stop.