Wednesday August 14, 2019 - 11:46:12 GMT
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4 Workable Tips from EagleFX on Risk Control in Trading Forex
Trading Forex can be profitable, though loses can be incurred in cases of negligence, greed and ignorance. No human has a 100% trading skill but due to experience and discipline, many traders are always leading the trading pack. This article will cover some of the easy workable tips every trader can adopt in and employ in control trading risks.
- 1. Carry Out Your Homework
For the fact that starting a forex trade is as easy as a piece of cake doesn’t transcend to neglecting due diligence. Getting good knowledge of forex before plunging into the world of trade is elemental to the success of a trader. Some things to learn about should include economic and geopolitical factors that affect a trader’s adopted currency type, world events and regulations, unstable market conditions. Part of your homework should include creating and developing a trading plan, a methodical approach for assessment and appraising investments as seen on EagleFX.
- 2. Hard Stop Loss Trading Techniques
A hard stop loss is always recommended over a mental stop loss for traders, therefore one of the most workable risk control tips is the hard stop loss measure. According to EagleFX, the precise difference between a hard stop loss and a mental stop loss is quite clear:
- A hard stop loss is executed the moment prices reach a specific level and its active in the market. It doesn’t require any effort from the trader once it’s been set as it is automatic. It forces the trader out of out of trade thereby erasing any psychological hedges connected with trade losses.
- That level at which a trader takes the decision to exit a trade but hasn’t set a stop loss order is called a mental stop loss. Since it is open – ended, it allows too much contemplation space for the trader which in turn introduces a human- inflicted delay even when the trader knows it’s against their best interest.
- 3. Avoid Use of Excessive Leverage
Trading the market could be risky and there is no sealed guarantee that a trader must make profit which is where leverages come in. But disaster is when you don’t use them minimally as its excessive usage can wreck your account. The intent of this advice is not to make you scared but to have a healthy approach to risk taking. Take for example, you purchase a home theatre device and the maximum volume is 100, common sense should tell you that you don’t have to increase the volume to the maximum to achieve the best sound. The same thing applies to leveraging, as traders, the aim should be to stay in the game for a longer period, in that case leverages should be within ratio of 10:1, 3:1 or at most 4:1.
- 4. Use a Reputable Broker
The idea of using a broker cannot be undermined, but using a reputable and reliable broker is paramount. Before using any broker, be sure to look out for their account offerings, their commissions and spread, leverage amount, initial deposits, withdrawal policies and funding of accounts. Reduce your stress in finding a reputable broker and signup on EagleFX and convert your trading dreams to reality with them.
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