Category: 1. Risk Management

Summary: Risk Management

Be the casino, not the gambler! Remember, casinos are just very rich statisticians! It takes money to make money. Everyone knows that, but how much does one need to get started in trading?The answer largely depends on how you are going to approach your new trading business. It varies...
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Study Your Losses to Realize Gains

Traders are often so fixated on their winning trades that they totally ignore their losing trades. But it’s from your losing trades from which you stand to learn the most. Here are three ways to learn from the trades that didn’t work out. 1. Calculate your performance Look up your past trade...
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Reward-to-Risk Ratio

To increase your chances of profitability, you want to trade when you have the potential to make 3 times more than you are risking. If you give yourself a 3:1 reward-to-risk ratio, you have a significantly greater chance of ending up profitable in the long run.Take a look at the chart...
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Never Risk More Than 2% Per Trade

How much should you risk per trade? Great question. Try to limit your risk to 2% per trade.But that might even be a little high. Especially if you’re newbie forex trader. Here is an important illustration that will show you the difference between risking a small percentage of your capital...
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Drawdown and Maximum Drawdown Explained

So we know that risk management will make us money in the long run, but now we’d like to show you the other side of things. What would happen if you didn’t use risk management rules?Consider this example: Let’s say you have a $100,000 and you lose $50,000. What percentage of your account...
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How Much Trading Capital Do You Need For Forex Trading?

It takes money to make money. You need trading capital. Everyone knows that, but how much does one need to get started in forex trading? The answer largely depends on how you are going to approach your new start-up business.First, consider how you are going to be educated. There are...
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What Is Risk Management?

Risk management is one of the most important topics you will ever read about trading. Why is it important? Well, we are in the business of making money, and in order to make money we have to learn how to manage risk (potential losses).Ironically, this is one of the most overlooked areas...
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