Risk Management Basics and Fund Protection
Risk Management
Learn the art of risk management and have full control over your funds. Risk management is the most important aspect of trading. Having a sound money management system will make a huge difference in your profits. It will help improve your performance and minimize your losses.
Risk management is what can separate you from going broke to becoming a successful trader. Many traders do not realize there is not always a reward in the market but there is ALWAYS risk. Although profits cannot be predicted, the only factor you can control is risk.
Risk management basically deals with 3 elements:
- Choosing the size of your position (position sizing is the calculation of how many lots you should hold in a position).
- Damage control (this is the amount to risk in each trade (in USD).
- Setting your stop loss in pips away from your entry level.