How risky is Forex ? :

How risky is Forex ?

Forex is risky, like all financial markets.

So you need good risk control

Risk management can make the difference between a career of 20 years of success and a loss of capital in a single year.

Trading boils down too often for some by making money quickly in order to live their dreams effortlessly. If only it was so easy ...

Of course, trading does not really require physical exertion whatever the sport makes it better to keep a cool head. Trading is especially tiring from a psychological point of view. It is necessary to control his emotions, to rationalize the decision-making process and to know how to wait in position and out of position.

How to apply this on the FOREX ?

More than any other market, risk management is crucial on the forex because the latter often offers very important leverage. The daily movements on the forex are not huge and therefore require leverage to create raw performance.

It is not uncommon to see leverage at 1: 100. Some brokers even offer 1: 400 ... The lower your experience is, the less leverage you should use.

Why a little leverage to start on the forex ?

In the beginning, everyone lacks experience, that goes without saying. So you're going to make a lot of mistakes, which is normal. But you want to minimize your losses resulting from lack of experience as much as do what may.

Using a minimal leverage allows you to make these mistakes without consuming too much capital. This gives more time to reach out and adopt a paid strategy. This is having a discount on your first trading experience.

No one should be ashamed to start small, leveraged and earn only 0.3% per day, waiting to know enough.

Diversification to minimize exposure to risk is a tool. But diversifying your trades without doing the right analysis upstream will not save you.

Trader on several pairs, several markets, reduces the risk but only if one knows what one does. Putting a little money here and there will not save you from a global losing position.

On the forex, there are not many pairs with trading volumes so large that they offer a spread of marginal rate (a pip or a few pips). Diversifying is therefore not really an option on the forex. But if you are able to trade other markets like oil, rates, why not diversify a little.