Develop the proper risk management skills and mindset so you don't become part of the 95% of new traders who end up losing all their money.
Be a trader, not a gambler! Read on to find out the difference between the two.
Risk management is one of the most overlooked areas of trading but it is one of the most crucial for success. Here’s why…
Here are a few things you should consider when figuring out how much money you should allot for trading.
What would happen if you didn’t follow your risk management rules? You can find out the hard way, or you can read this example.
Still trying to figure out how much you should risk per trade? Here’s an illustration that could help you with your risk management rules.
Wanna learn a great way to increase your profitability? You can start by improving your reward-to-risk ratio.
Why scrutinizing your losing trades can help you realize more gains.
Make sure that your risk management rules are in place and that you follow them at all times. You don’t want to lose your shirt!
Just because brokers allow you to open an account with only 25 USD doesn't mean you should. That is, unless you want to fail.
What exactly is leverage and how does it work? Make sure you get this concept down pat so you don’t get any surprises!
What is the difference between leverage and margin? You don’t want to confuse those two terms and wreck your account.
Everyone fears the dreaded margin call. What does this mean and what happens after you get it? Read on to find out!
Make sure you fully understand how margin and leverage work in order to avoid getting a margin call. Here’s how you can do that:
Check out this concrete example of a trader whose account got blown by the negative effects of leverage.
The more leverage you use, the less breathing room you have for the market to move before you get a margin call. Here’s an example to illustrate.
Not only does leverage amplify your losses, it also amplifies your transaction costs as a percentage of your account. Check out this illustration.
Understand when to take advantage of leverage and when it can damage your account. Here are some things to take note of.
Position sizing is setting the correct amount of units of a currency pair to buy or sell.
Knowing how to properly calculate your position size is crucial in risk management. Here’s what you need to calculate your position size.
Here are some examples on how to calculate your position size whether your account denomination is the same as the base currency or not.
In this lesson, you will learn how to calculate your position size when your account denomination isn’t one of the currencies in the pair currency pair that you wanna trade.
No time to crunch the numbers yourself? Check out our position size calculator tool that can help you manage your risk well.
Stop losses not only help you limit your losses and help you move on, they also eliminate the anxiety caused by losing on an unplanned trade.
Thinking where to place stop losses is one of the most important things that you should do before even entering a trade. “Live to trade another day,” is something you should always remember in trading.
Never ever set stops based solely on the amount you’re willing to lose. Setting stops based on your account balance is a sure fire way to lose!
One of the best ways to set stops is based on charts. Find the places where prices can’t seem to push or break and then decide where to place your stop.
Did you know that you can set stops based on the volatility of a certain pair? Knowing how much a currency pair tends to move can help avoid being prematurely taken out of a trade by the random movements of price.
Time is of the essence, even when trading forex. Set up a time limit to cut off those dead-weight trades so your free to move on to new opportunities.
There are a lot of mistakes traders make when setting stops. Here’s a list of the most common ones.
Often times, the market doesn’t move in accordance with your expectations. You have to know the times that you should stick to your pre-determined limit orders or make stop adjustments on-the-fly.
Like anything else in trading, setting stop losses is a skill. If you continually practice the correct way to set stops, you’ll be one step closer to becoming a professional risk manager!
Don't worry! We won't tell you to weigh yourselves before and after your trades. Instead, this section will teach you how to get creative when making pips!
Scaling is one of the most important strategies in risk management that you need to learn to be consistently profitable. It can help you adjust your overall risk, lock in profits, and maximize your profit potential.
“I’m winning. Should I keep my trade open or should I close it?” The answer doesn’t need to be just one of those… Sometimes, you can actually choose to do both!
Adding to a losing position is considered as a no-no by many traders, but it’s possible to do safely. Learn how.
While it may lead to a higher level of risk sometimes, if done correctly, adding to an open winning position gives you the ability to increase your maximum profit.
Knowing the correct way of scaling in and out of trades is essential. Manage your trade properly and sooner or later, you will catch that one move that will bank you some serious money!
Have you ever noticed that when a certain currency pair rises, another currency pair falls? Somehow, they're all connected.
Simply put, currency correlation tells us whether two currency pairs move in the same, opposite, or totally random directions.
Take a look at the strength (or weakness) of correlations between the most popular currency pairs over various time frames!
When you are simultaneously trading multiple currency pairs in your trading account, you should always make sure that you’re aware of your total risk exposure.
You’re probably wondering how using currency correlations can improve your trading. Well, wonder no more because we know the answer!
Although correlations between currency pairs are strong (or weak) for days, weeks, months, or even years, they may eventually change–sometimes when you least expect it!
You can calculate currency correlations in the comfort of your own home with your favorite spreadsheet application. We’ll teach you how.
Like synchronized swimmers, some currency pairs move in tandem with each other. And like magnets of the same poles, other currency pairs move in opposite directions.
Decide what you want, decide what you are willing to exchange for it. Establish your priorities and go to work.H.L. Hunt