HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
XM information and reviews
XM
86%
NordFX information and reviews
NordFX
86%

Risk Management Tools and Techniques


Trading on the FOREX market is exciting, but what makes it so exciting is what simultaneously makes it risky – volatility. Certain trading strategies depend heavily on this volatility and make high frequency trades hoping to take advantage of it, but exposing your capital to volatility can result in losses.

There are ways to protect your assets from volatility though - through various tools and techniques you can manage it and expose yourself only to the amount of risk you are comfortable with. First and foremost – the best risk management tool any trader has in their arsenal is knowledge. Knowing what economic and geopolitical events happened, are happening or will happen will help you adapt and dynamically pivot your trading strategy and goals when necessary.

Know When Leverage is Your Friend


Leverage is a tool used throughout the financial industry and very frequently in FOREX, remember that leverage has the potential to multiply your gains, but it can also multiply your losses. Just because you may have access to high leverage, knowing when to use it will help you avoid surpassing your risk limit.

Custom Alerts


Certain trading platforms allow user customizability in the form of EAs (Expert Advisor) which are programs that can perform various functions within the trading environment. One function EAs can do is sending notifications to traders if their position or instrument surpasses predetermined price levels. Some EAs even allow for automatic closing or opening of positions, but this automated process could expose you to even more volatility caused by unforeseen geopolitical events or an abrupt change in market sentiment, so caution is important when using these.

Become Your own Therapist - Trader’s Psychology


A frequently used term, put simply it is entering or exiting a position or trade too soon or too late, resulting in unfavorable results. A great example of this frequently happens when an instrument is in retracement but not in a full-blown reversal – causing the trader to panic and exit a trade only to see the price of the instrument recover shortly thereafter. Another example is when market sentiment drives up the price of an instrument – causing traders to jump on a “train” which is stuck at the station (the station being in this analogy, the current price of the instrument when you opened the position).

Be Your Own Warden – Discipline


This may seem like advice which is more applicable to a mystic form of martial arts, but if you ask any experienced investor, they will undoubtedly mention “discipline” as a key component of reaching your investment goals. Developing a strategy that defines both your goals and risk appetite is only useful if you stick to it. Having a knee-jerk reaction to abrupt market fluctuations is almost a sure-fire way to expose yourself to unplanned and unforeseen risk.   

Safe-Havens Are Your Friends – During Market Volatility


A few years ago George Soros went on record saying that gold was the ultimate bubble, but a few years later invested in a the SPDR Gold Trust with tremendous results. Safe-haven currencies and commodities have been the go to – well, safe-haven – for serious, experienced and knowledgeable investors during times of market volatility. What better hand-book to take a page from than from the book of serious investors, like Soros.

Stop Loss Limits


This is an oft-used tool traders implement when managing risk – it is a level set by the user that automatically closes the position when their designated level of loss is reached. For example you can set your Stop Loss limit 10% under the price the instrument was at when you opened the position, exposing only that equivalent of your initial capital to that loss (plus any broker fees accrued by opening and closing positions).

dealCancellation – Cancel a Losing Deal


Most brokers offer ways to minimize exposer to risk, but easyMarkets offers its traders the ability to cancel losing trades with one simple click. If your stop loss is reached before the dealCancellation time limit is reached, and still recover your invested amount. When opening the trading, click on dealCancellation and it allows you to cancel your order within a predetermined period of time for a small fee. This is a great tool, for example when economic calendar events can affect the movement of a currency or investment instrument in unpredictable ways. 

Exposing yourself to risk when trading is inevitable, but at least you can avoid exposing yourself to unnecessary risk with knowledge, the right tools and of course partnering with the right broker.


Sources:

#source


RELATED

MT5 in Copy Trading and Social Trading

MetaTrader 5 is a leading trading platform with many trading opportunities, from providing technical analysis tools to creating trading group chats...

Why do people use MetaTrader 4?

MetaTrader 4 is a powerful tool for traders of all levels. Find out why so many people rely on it to power their trading success...

Trading Secrets: Mastering Trends, Breakouts, Pullbacks, and Corrections with Trading Volumes

Embarking on the journey of financial market trading – be it in Forex, stocks, commodities, or the crypto market – requires more than just an understanding of the basics...

What Makes Bitcoin Valuable?

The digital currency Bitcoin has a dedicated following, regularly makes headlines and inspires countless investors to consider making...

The Basics of Fundamental Analysis for Forex Market

Fundamental analysis is a trading discipline traders and analysts commonly use to assess the intrinsic value of a financial instrument by examining the underlying assets, industrial conditions and the broader economy...

Copycats: How social trading is changing the game

The landscape of investing has undergone a remarkable transformation. Traditional investment strategies are being challenged...

Weekend trading

The forex market typically operates 24 hours a day, five days a week, from Monday to Friday. However, some brokers offer the option of weekend trading...

Choosing a broker to trade the financial markets

Choosing a broker to help you navigate the financial markets is an important decision that can significantly impact your trading experience. There are several key factors...

Factors affecting the Forex Market

There are several external factors that affect Forex currency trading. These factors include trade reports, GDP, unemployment, international trade, manufacturing etc...

How patience impacts your trading psychology

Trading psychology plays a major role in determining trading success. It refers to the emotions, behaviours, and various other aspects of a trader’s character that may impact their trading decisions...

Safest Forex Brokers: Prioritizing Security and Trustworthiness

When it comes to choosing a forex broker, safety and security should be paramount in your decision-making process. The reputation and security measures implemented...

Six Habits of Successful Investors

You won’t make a fortune at the snap of your fingers unless you’ve won the lottery or received an inheritance. Wealth should be the result of a systematic approach...

Seven Key Components of a smart trading plan

Trading decisions typically depend on several factors. These include market volatility, economic or geopolitical events or announcements, market sentiment, investment goals, etc...

The power of Forex community: Tap into the knowledge of fellow traders

We believe that the task of navigating the intricate markets can be much more fun and easier if you actively engage in the vibrant exchange of trade ideas and concepts with your fellow traders...

Harnessing Volatility: Turning Market Fluctuations into Profitable Opportunities

The financial markets are a dynamic realm, known for their continuous fluctuations across various asset classes. While volatility is often associated with risk, it's imperative to recognize the manifold advantages it offers to savvy traders...

A Brief History of Forex: How the World's Largest Market Has Evolved

In the early 1970s, foreign exchange was a rarely discussed topic. The few market participants who dealt in Forex were primarily multinational banks and currency dealers. Fast-forward 40 years and the world of foreign exchange...

Guide to Expanding Your Forex Trading Account

The realm of forex trading is undeniably intricate. Yet, it is far from unattainable. It beckons to those equipped with determination and the right mindset...

Ten Trading Quotes that Will Change Your Trading

Having trouble setting your mindset on trading mode? Need inspiration or a tip to improve your trading? Look no further...

Deep Dive into the Dynamics of Forex Currency Pair Volatility

In the dynamic ecosystem of the Forex market, volatility reigns supreme. By grasping the nature and triggers of currency pair volatility, investors unlock the potential to navigate the market strategically...

Things Football Can Teach Traders

As the 2022 FIFA World Cup countdown is fast approaching, football fans from around the globe are picking up the pace to gear up for the world’s most popular game...

Vantage information and reviews
Vantage
85%
FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.