Here comes non-glamorous hard work nuts and trade bolts, money management exchanges but not less important.
How to manage your risk.
You see it doesn’t matter how perfect you think your strategy at that time will be wrong. “Not mine” you might say to yourself. You might think that you have a perfect system that never thought before. You might have returned to test it until the cow came home and traded a demo account for months. This was successful, it worked, succeeded! Oh and by the way you might think it’s new but you can bet the dollar down you someone somewhere has thought about it before.
So you start living with your own cash. At first all looked great but then a few sad days. It’s all wrong and the last trade is enough to delete all your previous advantages and then some.
If you don’t have your trading money management where you might win 9 out of 10 trade but the 10th trade will lose you more than 9 trade traffickers before. I saw that happened many times. There are three things you need to think about and we will immediately discuss them.
What happens when my strategy is wrong?
Having a stop order is an important but simple way to ensure you don’t expose yourself to the market. We will never go into trade think it will conflict with you but there will always be time to do it. So our advice will always “remember to order a stop loss” they will get you out of many problems, protect your capital and give you peace of mind. So it’s good to say again “the place stopped ordering when placing your trade”.
There are three types of stop orders that you might think of.
1. Stop normal
2. Stop Guaranteed
3. Stop Trailing.
The three have it plus point and depending on how you see something will depend on which it will be right for you. Let’s see what the difference is.
When you place your trade, the stop will be a point on the chart where you have planned to close the trade, therefore it is at risk of no more at that time. If the market starts moving against you and this point about your trade, with your losses, it will be stopped and trade will be closed. This means you have more control over your losses, not blindly leaving your trade and account open for a bigger hit. It sounds reasonable right? You will be collected with the number of traders who think they can do it without stopping. They did not tend to spend the old trade because their account burned very quickly.
The difference from normal is small and will be a little charged. Usually in a little extra form on spread, a few more points on both sides of the offer / offer price but some people might say it is worth it. The normal way of a stopped trade is seen in the example above. The market starts moving against you, your Stop Loss command is hit at the right level you have stated and your trade is closed. The market even though it doesn’t have to work like this. There is nothing to say that he must move up or down in the orderly faction. If for example there are some unexpected news, the market may be “gap” in both directions, especially after the weekend when the market has been closed. This tends to not happen as much forex as well as the stock market but there is still a possibility that you can be captured by this. The way to protect yourself from this is to use a guaranteed stop that will close your trade at the point you choose even if the market gap passes this.
This did exactly what he said. You set where you want to be a stop order and if the market moves against you, it will stop you at that time.