Today tutorial its about the good and the bad from forex investment! to be honest with you, there is a risk if we trade forex! I am quite sure that you guys, already knows what's the benefit from trading forex, e.g high return more than 100% profit, high liquidity, simple and easy, but not that easy ;), and many more! but do you know that you can loose all of your money, if you trade forex without implement good money management and risk management properly! :) I hope you realize about the risk! in this articles, I will tell you about the bad of forex investment and how to avoid your forex account getting burn in single day or week! this could happen! seriously :)
First of all if we trade forex and use big Lot we can loose a lot of money! for example, we have 1k usd in our forex account, if our leverage set on 1:100 and we trade 1 lot, we just need to loose 100 point to wipe out all our money! leverage in simple word means Scale! so if our leverage 1:100 and we loose 10 point it mean we loose 10% in our account! to implement good money management the trick is by decreasing the lot! let's say 0.10 or maybe 0.20! so when our trade losing 100 point we only loss $100 at least you still have $900 in your account, and hopefully on next trade we can get our money back! The idea of good money management is by decreasing the lot, so we don't loose big money in single trade!
Another concept how to reduce the risk in forex is by using risk management tools, I.e Stop loss! this tools can be handy if you short term trader, e.g scalper, day trader, news trader and etc! most of short term trader usually depend on technical analysis, and high impact economic news! it means they analyze market only for that day, on the next day ;) who knows right? to be honest with you short term trader in forex could be good or bad! depend on skill though, just combine all analysis that available from technical Fundamental, Economic news, Trend and find best pair I.e weak vs strong currency!
If you implement Good money management i.e reasonable lot, and Risk management i.e stop loss! for long run you could achieve success! so moral story about this article is, knowing the benefit of investment is not good enough! as an Investor you should know the risk and how to reduce the risk and make your investment become profitable! there's always be a risk in every investment! but what make you success it will depend on how you treat the investment itself! i.e reduce the risk to get reward!
another forex tutorial
- Forex trading Tutorial For Beginners Part 1 Forex Mindset
- Forex trading Tutorial For Beginners Part 2 Forex Term
- Forex trading Tutorial For Beginners Part 3 Forex Trading Platform
- Forex trading Tutorial For Beginners Part 4 Forex Analysis
- Forex trading Tutorial For Beginners Part 5 Money and Risk Management
- Forex trading Tutorial For Beginners Part 6 Forex Strategy Holly Grail