Australasian Association for Information, Communication Technology

Australasian Association for Information, Communication Technology

How much risk should a trader take in Forex?

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How much risk should a trader take in Forex?

Forex traders are always at risks to lose their money. Most of the time they do not know how to plan their risk management strategy and lost their money. Even if they are making a good profit in their trade, they place a bad trade in the market and lost all of their money. We are not going to tell you how you can manage your risks, but we are going to discuss how much risks should a trader take in the market. Different traders have different account size and risk matters when you are trading the market with a big account. In our discussion, we are going to tell you how much risks you should take based on your account, as money preservation is the most important thing that all the traders need to focus on this volatile market. You can even consult with the professional Australian trader and they will also tell you the same thing that managing your risk is the key factor in trading. For this very reason, the expert traders at Saxo always risk less than 3 percent while executing any trades.

If you are a beginner
When you are a beginner trader in forex, you can take high risks in your account but it should be only in your demo accounts. It is needed that you understand how big risks can evaporate your money from the account. You can also use leverage in your demo accounts. When you start trading on the live account, always look to reduce your risks to save your trading capital. The market is extremely dangerous and almost 95 percent of the traders lose money due to their poor risk management strategy. You have started your career and you do not want to lose big money in your first time. So make sure that before you start trading with the live assets you are well familiar with the perfect risk management plan.

If you are an intermediate trader
As you advanced from beginner to intermediate level trader, we hope that you have a good amount of money in your account like 1000 dollars or more. If you want to make consistent profit in your account, we should say that only take risks in dollars, not in percentage. If you risk 2% of your capital in every trade, if you lost 10 trades, you lose 20 % percent of your account. But losing 20 trades in the forex trading industry is extremely difficult. And if you follow the simple 1:2 risk reward ratio rule then even after losing more trades you will make money at the end of the month. And always remember that you should never trade with the money that you can’t afford to lose. The market is extremely volatile and no one knows what will happen in the next few seconds.

When you become professional
Professional traders have large accounts and they trade with excellent risk reward ratio. The time that they have spent in making their account grow into a large size has given them knowledge about the Forex market. By the time you become a full-time professional trader, you will know better how to take risks in your every trade. You will no longer have to use leverage as you will have a large account in the market. If you are new to this industry then try to learn the major three types of analysis. Never rely on your technical analysis skills since fundamental factors are often considered to the most powerful element to drive market price. Try to develop a balanced trading system so that you can survive the market heat.