How to avoid losses while trading in the Forex and its importance
You have to realize – as a novice investor – and as soon as possible since the start of trading in the Forex that your priority first is to reduce the losses to a minimum. In addition, you have to realize that the error in the scaled positions is the primary culprit responsible for the losses, in other words, you do not never excessive trading in the Forex through selected sizes and poses a much greater account of a large number of novice investors.
For example, how will you answer a simple question: Suppose that you have a balance available for trading worth $ 5000, what percentage of them will run the risk of this value in the process of trading the next? Here are some general answers to this question:
1. Lot of traders have said: “I will venture half, because I am in case I lose, I will be the other half of the trading.”
2. Others said: “25% of the amount, because I then I can lose 3 times and still be able to continue.”
These answers suggest that a lot of traders do not know that never in their losses multiply quickly may lead to the elimination of their accounts fully and quickly. You should always remember this important point.
For example, suppose you risk the whole account, consisting of $ 5,000 in the process of trading one, and, unfortunately, lost 50% of the amount, you now have $ 2500 only, ie you must make a profit of 100% of the value of your account so that they can be compensated bris and restore your account to its previous state. Every time you lose the 50% of your account, you need to be a profit of 100% to be able to compensate.
In case you have suffered two defeats in a row by 50%, the remainder of the balance will be $ 1250 only, this means that the process of trading the following should check you profit by 400% to be able to compensate. You do not forget that this effect is stunning if you want to succeed in the process of your trades in the Forex.
You have to repeat the truth, which says that “any loss of profit requires even greater offset” If your goal is to become a trader successful, this factor should be on the top of the agenda set by.
For example, if you risk, including 10% of the value of your account, and suffered 10 losses in a row, you will be left worth only $ 1,700 from the account. While you if you risk including only 2% of your account, you will be left $ 4100 loss after 10 consecutive operations.
It is clear that the second option puts you in a place that is more protective of the negative impact of the loss of the multiplier. For this, experts recommend not to risk more than 2% of your account in each trading process.
You should now be started in the process of absorbing the risk of excessive trading, and that you should always make sure that the sizes and Dat be accepted by the size of your account.
If what you need is always to even bigger profits offset losses, it is possible to ask whether Forex trading is a losing battle. And the answer is “yes” if they had followed the mentality of risk, and “no” if they followed the style of the work of a professional in the trading process.
In summary, you can conclude that the risk of a few percent of your every process in Forex trading, will lead to the absorption of a long time in order to achieve meaningful earnings, but this belief is wrong, because if you had you traded professionally, will be accompanied by a check successes consecutive profit doubling.