Some Tips In Risk Management

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Experienced traders will certainly be very interested in the management of risk. Rick Wright, trader and instructor at the Online Trading Academy sees the management of risks such as the "Holy Grail" in real commercial. His business experience and a variety of questions and input when he taught, he wrote some tips on the use of risk management presented in this article.

Suppose you have a method and strategies that you believe that this is the "Holy Grail" in commercial operations, and resumption of trade, it is a market condition that is so "perfect" strategy "Holy Grail" of you. You will enter the market by staking around the capital in your trading account? It comes to the use of risk management factors where force proportional. You must have a handle to apply logic and proportional risk management. Here are some tips from Rick Wright to consider.

Hint Number 1 : is the magnitude of the risk when switching between 0.5% and 2% of the account balance
If the size of your trading account is $ 10 000, then the risk per trade is from $ 50 to $ 200. The reason is if it turns out that you will experience consecutive loss, will not affect quickly by a margin call and will still be the next opportunity for profit.

Hint Number 2 : the number of commercial stations at the same time do no more than 4
If big risks for trade is 2% of the account balance, and you use leverage of 200: 1. With for example 40 jobs at the same time, they risked on your trading account. Even if you are an aggressive trader, trade in this way very reckless and too emotional. You will probably have difficulty in managing their business. It is recommended that, at the same time, posts no more than 4 open.

Hint Number 3 : set the frequency of daily, weekly, or monthly operations.
Depending on your negotiating style, we recommend that you determine the frequency of their activities in a day, a week or a month. These data should create a log in negotiation (business plan) for its evaluation plan.

Hint Number 4 : reduce the size of the position (of the trading lot size) when dealing with against the trend
If you are a dealer in the medium term or swing trader usually refers to the daily graphic main trend, but I saw opportunities in a time of 15 minutes with the opposite trend trading, may enter the position size is half of the lot when you work in an important trend. If you use the rule of 2% of your trading on a major trend account, you can apply 1% of the opposite trend.

The reason is simple: was certainly not a great advantage to trade against the main trend, so it will be safer if the risk is lower in order to anticipate if you reverse the trend at the time of the images low. Traders normally used trade as well when you go to the main trend of sharp decline. Objective of small profit levels, as well as the level of risk.

Hint Number 5 : determine the extent of the percentage risk per day or per week
Your trading account is $ 10 000, a risk of 2% per transaction, you open a trading position 20 during the day? Or 20 commercial position in a week? If the fully the position of its commercial losses, then you will experience a loss of $200 x 20 = $4 000 or 40% of the total balance of your account.

It is often skipped trader new trading and developed a plan to perform after a loss of time in 2 days, 3 days or a week. Even though it is relative and depends on its business strategy, but it is recommended to establish the magnitude of the risk by the trade, for example 5% 8% per day or per week.

Hint Number 6 : use a stop follower or move the stop loss, while the level of profit
Certainly known traders it is done. The experience of 'evil "them because of gains already fastened" fly' for granted. If you still control any computer screen, you can use the manual mode to change the level of stop loss if it is in the condition of advantage, no less than the equilibrium level. It is better at the beginning on the protection of the benefit you have earned it yourself.

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