Develop your plan for risk management

by Jacob Wright
(Singapore)

It is necessary to plan for a decent investment policy for the trades. You cannot execute your plans without having a strategy. It will also affect your mind and will not work efficiently. Thus, there is a chance of reducing profit potential. In the case of trading, you will also lose money with the trades. That is why it is necessary to think of risk management plans. If you can follow an organized approach, it will help you secure decent risk to reward ratio. At the same time, you can also ensure a relaxing trading business. The rookie traders are not informed enough to handle their investment properly. This article focuses on those who are struggling to hold on their trading money.


Read the article thoroughly and try to understand the importance of risk management. Develop a strategy to invest less for the trades. On the other hand, improve a secured trade setup which can reduce your risk exposure in Forex trading. Thus, you can run an organized trading business without big losses.


Focus on your risk exposure

Avoiding big losses is only possible when you have a decent risk management plan. To the rookie trades, it is exciting to use bit lots to trade with. But they do not understand the fact of Forex trading. There is more possibility of losing a trade. Sadly, more than 95% of the traders lose their money from the trades. Unless you can ensure a money management for the trades, the execution will be bad. You will lose more money than you can make profits. The reason is only big lots like 10% or 20% of the trading capital. Instead of this policy if you can reduce the investment to a 1% or 2% risk per trade, it will help you a lot. On the other hand, it also improves trading quality.


Along with a risk management plan, you need find the Forex trading account with proper leverage. Smart traders in Singapore prefers broker like Saxo since they offer high quality trading environment. So, chose your broker carefully to reduce the risk factors in trading.


Set a decent profit target

The risk exposure can also come from a poor profit target. For the executions of the trades, you need to define a proper risk to reward ratio. Based on it, the profit target will be set. So, you need to think wisely of the ratio. The profit target must not be more than 2R compared to the lot sizes. It will help you to trade with a short term trading process. You can execute trades properly and also manage a decent profit from the trades. So, select the right risk to reward ratio like 1:2 and ensure a decent trade setup.


Wait until you have filtered a high quality trade signal which is suitable for a profit margin. After placing the trades, try to use precise stop-loss and take-profit. Use the risk to reward ratio for those tools as well. It will help you to be secured.


Ensure quality trade setup

As mentioned earlier, you need to work on quality trade setup to execute the trades. Without proper management of the trades, there is no way you can control them. It also increases the potential losses from the trades. So, you need best signal to trade with confident. Being cautious, trade only when the market condition is right for you. Look for a major retracement in trending market. Look through multiple time-frames so that, you can understand the volatility properly and find the best potential trading spots


You will not lose big trades by using a balanced strategy unless you are not careful. So, be an efficient trader and trade with a secured plan. With this plan, you can ensure a decent profit from even at the novice level. And never lose confidence in the Forex trading profession.

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