Common Forex Questions » General http://commonforexquestions.com Tue, 08 Dec 2009 21:39:21 +0000 http://wordpress.org/?v=2.8.6 en hourly 1 What Is Risk Control and Why Is It So Important? http://commonforexquestions.com/what-is-risk-control-and-why-is-it-so-important/ http://commonforexquestions.com/what-is-risk-control-and-why-is-it-so-important/#comments Tue, 08 Dec 2009 21:39:21 +0000 Forex Trader http://commonforexquestions.com/?p=245 Risk control is often times misunderstood. I have actually seen it written that risk control is “not that important”. Naturally when I read this I almost fell off my chair!  Only someone who doesn’t trade Forex would tell us that risk control is not important. In fact, risk control is extremely important because without controlling your risk you will not be in the Forex trading game very long….and you can’t win if you aren’t in the game!

Risking 50% of your account equity is foolhardy no matter how sure you feel about the outcome of your trades. If 2 consecutive losses can take you out of the game you were never really in the game to begin with. 

A common method of controlling your risk is to only place a small percentage of your account equity on each trade. 1 to 3 percent is what is typically recommended. This gives you the ability to ride out those rough periods in trading when the Forex market and your trading system don’t quite see eye to eye. 

Your trading system will dictate what percentage of your equity that you risk per trade. How much you risk per trade should always be studied closely. If the amount is too small your account equity will grow much slower than it should. If the amount is too large…well we all know what can happen in that case.

]]> http://commonforexquestions.com/what-is-risk-control-and-why-is-it-so-important/feed/ 0 The Best Way to Learn to Trade Forex http://commonforexquestions.com/the-best-way-to-learn-to-trade-forex/ http://commonforexquestions.com/the-best-way-to-learn-to-trade-forex/#comments Sun, 29 Nov 2009 21:16:59 +0000 Forex Trader http://commonforexquestions.com/?p=239 One of the best and only ways to learn to trade forex is to actually do it, I know that sounds very straight forward and financially dangerous but do it with demo accounts. Try out as many different Forex brokers as possible sign up for many different demo accounts and treat that money like it was your own, do not make trades just for the sake of making trades make trades to make money and make trades to stop your losses.  This is probably one of the best ways to actually experience the forex marketplace, and see if you have what it takes to survive as a forex trader.

Several forex brokers have education centers built right into them that explains, some forex terminology and forex indicators, this does not mean that they are the best broker out there or that a broker with no education center out there is a horrible broker, every broker has different pros and cons. The most important thing is to find a broker you are happy with and start demo trading try different systems, indicators, trade at different times of day set different limits and work very hard to get that demo money to grow.

So you’ve been trading your demo accounts and it is going great looks like your a forex wizard, your demo account is growing at incredible rate and you can’t wait to get your real money account off the ground and running.  Here’s the best advice I can give you SLOW DOWN !!! You can have great days, weeks even months, but just when you think “I have got this mastered” the forex market can turn and teach you a lesson.  Always input your stop losses and stick with a system you are comfortable with and don’t leverage too much of your account.

So what you are really looking for is experience in the forex marketplace before you get into buying a robot or investing a large amount of capitol, you need to know if you can trade successfully and a demo account with any broker is one of the best ways to find out.

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