Basic Risk Management

In business it is common knowledge about the hierarchy of control in risk management.
In Spot Forex to be successful one should also apply such principles.
At the top of the hierarchy pyramid is elimination of risk. Often because of the nature of Spot Forex this is very easy and the best risk mitigation principle to apply.

  1. High impact economic data releases.
    Prior to the scheduled release don’t have any open positions on currency pairs that may be effected.
  2. Close trades prior to weekend due to risk of weekend gaps.

Next in order is substitution. If anyone can think of a way to substitute please share.

Third on list is engineering control.

  1. Use stop loss orders.
    2 Take profit orders.
  2. Trading robots.

Administrative control comes next.

  1. Have a trading plan written down and stick to it.
  2. Have money management system written down and stick to it.
  3. Have a trade diary and record your trades.

And finally we come to personal protective equipment. Once again I can’t think of anything here but if anyone can please share.

Also please add to my list if you can think of anything else.

Wishing everyone happy, safe and prosperous trading.


what is going on?

I think you have said a lot of very important points to risk management. Almost everything you have written here is exactly what I do.

Great post.



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thanks for that, well needed reminder <3

hope you all have a good trading week those that are trading

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what you think mate , there is any different between money and risk management ? its all about same of any difference between two. ?

My thoughts are that money management is just one part of your entire risk management plan.

Risk management is the most important topic in any business. Because the basis of any business is financial investment and we must do everything possible to save our money and create the conditions for it to become even more.

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risk management is really important for any kind of works , despite of having lots of money and plan , all approach can be useless if there is no RM.

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You summed it up really well.

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Money management is a part of trading. If you do not manage money, you will face a lot of losses. Money management is a part of the trading discipline. Successful traders follow money management all the time. Money management often converts bad trades into good trades. If you want to trade, you can earn a lot of money in one day, but if you do not follow the money management, this money can be spent in one day. So it is necessary to follow money management at all times in trading.

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Hi! I do agree with you. All points are valid. I also try to stick to the same, that helps a lot.

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