In the world of forex, there is a huge gap between trade and analyze. All traders must learn to manage the risks if they expect to benefit systematically.
Thus, the classical question that often arises is why some traders can make money on a regular basis while others lose.
The difference between trade and analyze
Many new traders entered the market with a different background, there are sectors of the economy, finance or politics. But one of the biggest mistakes a merchant that expectations that "markets are often wrong and the price must be definitely will return again."
But this time we need comfort to our perception that the market is not easy to guess, and regardless of the type of analysis that used when there are a number of new information coming soon on the market would be a similarity that prices for producers and traders don't want to lose money or loss in trade.
This statement, finally making this analysis becomes useless? Of course not, the analysis is only part of being a successful businessman. The analysis is the way to get the probability with the benefit of the merchant.
The following example uses the risk of mismanagement that could be devastating with 70% success rate.
How to make an analysis of the trade
The first thing, traders, need to have goals which Transact in the currency markets is to make money with the potential losses are small.
Therefore, based on the above facts, the next logical assumption is that the operator must be able to control their losses.
Management not only as a commercial style or preference of the risk, but is the absolute imperative of long-term benefits.
When a mentor or traders who have experience with the upper part of flight hours explaining risk management, rarely that a trader is willing to defend themselves against their seats to go and manage the risk of the transaction. Most people only want to hear or dealer in open positions, strategies and methods of analysis to try to get more opportunities. The above statement is not wrong...
When a dealer to learn how to manage the risk, will be much more to work. The first to do, which is observing the appropriate management risk because trade is not just an "idea" and "hope".
A lucrative trade analysis applied in the risk management should be appropriate so that losses can be minimized and the benefits can be maximized (see risk management).
How to start to use risk management 'right'?
As human beings, we often follow the instinct or "feelings".But in trade, we must develop the appropriate strategy and focus on the type of small risks and higher returns.
How to fix trade with proper risk management is establishing a limit on the losses and limit profit in every transaction with a minimum of 1 ratio of risk reward.
Unfortunately, the management of risks is not as simple as simply establish a level of stop and limits. If a trader takes a position that is too large compared with the size of their accounts, even if a hazard ratio of 1 / 2 or 1: 3 will create opportunities for trade will fail.
The next, never put all your eggs in one basket, and to realize that the impact of the use of leverage can bring large potential losses.
And make your heart that the strategy of the Holy Grail (strategy likely loss) does not exist, and the best thing you can do is watch and uses an approach adapted to the market conditions.
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