No matter if you are an experienced trader or a total beginner, you are all together in the duty to reduce Forex trading risks and maximize profitability. We’ve put together a list of five easy-to-implement advices that would seriously help you move in that direction.
Reward : Risk Ratio
Keep you reward:risk ratio always present. In many occasions we’ve emphasized the importance of respecting your strategy and trading style. With risk, same rule applies.
If a trade falls out of your pre-set reward:risk ratio tolerance, then simply stay out of it. Trust us, there will be so many more opportunities in the near future. Letting one go won’t hurt you.
Avoid manipulating your stop loss / take profit levels in order to find a higher reward:risk ratio.
Add flexible stops
Using stop loss orders to protect your account is a wise decision. No question about it. BUT using pips-based fixed stops is more dangerous than applying flexible ones. Fixed stops do not take into account price fluctuation, which is of course a huge disadvantage.
Do not move to break-even
We have all been tempted to do so. You position is going great and you are in plus and you change your stop loss to break-even in order to avoid any risk in case things move in the other direction. Wrong.
By doing so, you are cutting a significant space for your position to naturally move up and down, risking to stay empty handed and therefore wasting your time.
Size is everything
I know… cliché. But as weird as it sounds, it is true 100%. You cannot just define a percentage of 1 or 2 percent of your account and never change that setting.
Context changes, you should too. If a position is following a clear trend that has still long way before it changes, then you might consider scaling up your trading volume. Same viceversa.
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