Resolved Question
Do you think these ideas really work in forex trading?
“Do not risk more than 1% of your capital.” versus “Do trade more than 1% of your capital.” Here's another one: “Do not over-trade.” versus “Trade as much as you like”.
over 2 years ago
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To answer your question, yes, these are ideas really do work.. In fact, I believe they are REQUIRED to be successful in forex trading. Money management is one of the most important aspects in forex that you need to survive and of course, eventually be successful. There is a time in everyone's trading career that he/she will experience consecutive losses. With a good money management plan, you can be sure that even when you experience these losing streaks, you have enough capital in your account to bounce back up.
over 2 years ago
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Answers (3)
Ha ha, why don’t you try those in a demo account? I haven’t thought of these until now.
over 2 years ago
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One of the most important aspects to trading is that of risk management. The reasons why such ideas are implemented is to that a trader can protect him or herself from exposure to under capitalization. The problem is that in trading, it is inevitable that a trader will hit a string of losses. If the traders risks a substantial portion of his capital per trade, he/ she runs the risk of losing all the capital. Thats why it is important not to risk too much per trade - it allows a trader to survive much longer.
over 2 years ago
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Effective risk management is a key factor in successful FX trading. Risking less than 1% of your account in every trade gives you a sizeable amount to trade and at the same time minimizes you risk in that you could still somehow be able to recover your losses in case the trade doesn't go your way. Also, being cautious about over-trading keeps your market perspective in check because it prevents you from "revenge trading" or trying to catch up with the market especially after you've lost a trade.
over 2 years ago
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