Every single day the number of retail traders in the forex trading world is increasing at an exponential rate. In the past trading the financial instrument was only limited to large banks and institution but due to the recent technological advancement, normal people like us can also trade the live asset in the market. But if you look at the success rate in the forex trading industry then you will be shocked to see that only 5 percent of the traders are making money consistently. Most of the novice traders in the forex market loses money in forex trading since they don’t know how to execute their trade with proper risk management factors. So if you truly want to become a professional trader in the forex market then make sure that you learn the advanced way of managing your risk in forex trading. In this article, we will learn the advanced risk management factors in live trading.
2 percent rule: Those who are trading the forex market for a couple of months must know the famous 2 percent rule in the forex trading industry. But we will give you a clear insight of this rule as most us don’t know what the 2 percent rule is. As a professional trader, you should never risk 2 percent of account capital any single trade. But if you take more than one trades then you should reduce the risk exposure in every single trade so that the overall running risk doesn’t exceed the percent of account capital while trading the foreign exchange market.
Trailing stop loss: Trailing stop loss is one of the most profitable ways of managing your risk in the forex market. When you execute any orders in the forex market make move your stop-loss to the breakeven level once the trade goes in favor your direction. All the professional traders in the financial industry ride the long term prevailing trend in the market by using the trailing stop loss features and maximize their profit in the market. But when you use the trailing stop loss features in the market try to use the knowledge of key support and resistance level since it will help you a great deal in placing the trailing stop on the market.
Book your profit: Most of the professional traders book a certain portion of their profit in the forex market once the market moves in favor of their direction a certain extent. This term is often known as partial closing in the forex market. So if you truly want to become a profitable trader in the forex market then make sure that you book a certain portion of winning the trade in the market and then use the trailing stop loss feature to maximize your profit in the market.
Summary: Risk management factor is often considered to be the most important element in the forex trading industry. If you look at the professional trader then you will see that every single one of them is trading the market with proper risk management factors. Last but not the least never trade with the money that you can afford to lose.
