EnglishRisk management for Forex and CFD trading
Risk management in a nutshell
In the course of its work, each company faces risks, opportunities for the occurrence of any negative phenomena. Risk management is put in place to prevent unwanted events from being caught by surprise.
The risk management process includes the recognition, assessment, and control of all threats to the organization and capital returns.
Each company in its market position may be exposed to the following risks
- Risk of falling sales;
- Risk of uncontrolled growth in costs;
- Organizational risks (risks associated with mistakes of the company's management, its employees. The leverage we mentioned above is also a leverage tool. However, it can also be tricky because you can lose your investment and not be able to pay the loan. For all the complexity of the process, the risk management system and other trading tools still help to predict market developments and get a reward for a deal);
- Technical and production risks (risks of fires, accidents because of improper organization of the production process; the likelihood of losses because of failures and equipment breakdowns, etc.);
To avoid unwanted losses in Forex trading and contracts for difference (CFDs), many traders resort to leverage, which can help to cope with a difficult financial situation.
Risk management tools
Forex Risk Management uses a variety of tools that reduce trading losses and allow the trader to make high profits. Forex risk management is based on four important steps:
- Search for possible risks
- Risk analysis and assessment
- Finding solutions to reduce risk
- Management and application of solutions to improve the trading system
The leverage we mentioned above is also a leverage tool. However, it can also be tricky. Because you can lose your investment and not be able to pay the loan. For all the complexity of the process, the risk management system and other trading tools still help to predict market developments and get a reward for a deal.
Fuzzy market assessment
Trading Forex and CFDs is directly related to the market sequence. Your estimate may contain errors when the purchase and sale prices are inaccurate. To prevent defects, OrbitGTM adapts the basic structure of your market research so that the final analytical report clearly matches the information needs of your enterprise and contains forecasts for the dynamics of the indicators you have determined.
Market gaps
The lack of important information can be because of a sharp jump in price. While you may have long days of profit, keep in mind that the market is always volatile and can change things unpredictably. In order not to suffer large financial losses, track your profits and monitor the market.
Stop-loss
With strong market volatility, quotes may also change. This leads to unwanted monetary losses. To prevent this from happening, set a stop loss. Stop-loss is a function that allows you to set a limit, after which you automatically stop trading. This way you can prevent unnecessary waste.
Order size
As we mentioned, no matter how talented you are, the market can still be unpredictable. You don't always reach profitable trades. According to statistics, a good Forex trade quota ranges from 5 to 8 winning trades out of 10. With this data, you can calculate your order sizes with enough trading capital available to outlast the market movements.
External factors
Risk management must also consider external factors that do not depend on the results of the strategy. Therefore, consider them (power outages and/or internet connection failure) so that they do not negatively affect your trading quotes.
Choosing leverage
High leverage (excessive leverage) will increase your risk and a few negative trades can ruin your overall trading result. With OrbitGTM you can: choose your preferred Forex leverage from 1:30 for retail clients and up to 1: 500 for professional clients.
Tot up
- Maintain an adequate level of the fund to better manage business risks. In this way, you will withstand internally and reduce external storms, and then correct and eliminate them.
- Proper risk management will help identify risks and reduce the possibility of unwanted losses.
- Control your emotional state. The psychological factor of failure can negatively affect your achievements.
- Use the tutorials available on the OrbitGTM website. We offer videos, books, news, diagrams that will help you understand how the global and local market works. Take a step towards
Take a step towards creating an account
This is a small step for you, by a giant leap to your financial future with OrbitGTM.