Knowing how much you can afford to loose can be a great edge to bettering yourself as a trader. Say i had $500 and I am willing to loose $50 from that. I would place trades with micro lots and stop-losses in such a way that if I loose a certain number of times would wipe the $50. And that helps because if I know my trading method can not loose 10times in a row, if it does then I loose $50 only.
It is not normal to know how much you have to lose in forex trading,because knowing that will make you to lose more,is better you have in mind that you are not going to lose anything so if it occurs it will not be much.
Your first mistake is going into it figuring how much can I lose. Instead think 1st how can I put a system in place that meets my goals over the long haul. Whether you can lose $50 or $50,000 doesn’t matter. The fact is you can’t win a 100% of the time. What you can do 100% of the time is trade with a system that will give you more success than failure over a period of time by putting the balance of probabilities on your side. Example. Trade the trend, make sure momentum is on your side, trade the beginning of the cycle not halfway through. Confirm with Support and Resistance. Learn basics first, then test and then trade. Easier to make decisions when you have relivent data to look at. My opinion of course
Gp
It is important to keep in mind about loss. So that we trade accordingly we st stop loss as much we can afford easily to loose. I think a trader should know the percentage of loss before enter in market to open any position. Because each trade involves profit and loss.
When starting in forex trading one must accept the fact the he has a big probability to lose so it is wise enough trade only what we can afford to lose.
Accept the fact that losing is part of the game but focus more on winning trades…like only take the trade when you have a clear direction where this trend is going and do your “homework”. Accept the lose but still have more winning in your side so it will offset the losing one.
In forex market loosing is the way to gain success because on start the trader can do mistake as i did on my start. i have suggestion if anyone want to start first trading with $500 then he should keep in mind that he can loose this money any time and can earn profit form this. so he should keep another $500 to his hand for rescuing this loose.
Have Lose too much will affenc the mental of own traders , this bring the traumatize in the trader mental then with traumatize the traders will feel anxiety during trade and impact of anxiety is fearful and too worry in actions , That is why we must calculate the risk of loss that will achieved at every transactions so we can afford to loss in the result
I am trading for about 3 years with ZuluTrade and the ZuluGuard application they created is a fantastic asset to protect you and to help you trade safely.
Sometimes 5% is recommended, but it’s too much for me, so I guess 1% of my deposit is enough to minimize risks. Yeah, I can afford to lose about 1% of my deposit.
Your trading capital must be money that if lost will not jeapordize your capacity to pay your living expenses. Once that is established your position sizes should be such that a disaster will not wipe out your trading capital and a typical loss will be optimal in your overall trading strategy implementation so as to minimize drawdown and maximize profit potential. All that sounds nice and it is but it takes considerable effort to get all that accomplished.
Sometimes even a great plan can still go wrong when dealing with risky business:
Every trader has different consideration about money he can afford to take in each transaction. It is good if you risked only 1% in each transaction but it is good when you had high amount of capital. If your capital is low amount of dollars (lower than $1000) so it is better to risk about 1-10% in each transaction except if you’re scalpers. If you’re scalpers, it is possible to open position many times so risking 1% in each transaction is still acceptable.
1% risk per trade is only part of the consideration necessary. If the stop distance is 1% or more of the total pip value of the pair, then a sudden illiquid move will not completely wipe the account out. But a 1% risk position with a 10 pip stop on a pair at 1.0800 would wipe the account out completely on a move half the size as the Jan 15th swiss move. The solution is a maximum position size per pair or said another way: a minimum stop distance.
One easy method: [B]Risk 1% per trade with a minimum stop distance of 2% of the total pip value of the pair.[/B]
A trader following that rule in a swiss pair on Jan 15 would have seen about a 10% change in his account size per swiss pair he traded.
What is a 2% of total pip value stop? If the pair is trading at 1.0800 it has a total value of 10,800 pips. 2% of 10,800 is 216. The minimum stop distance for a pair at 1.0800 at a 2% minimum is 216 pips.
Yes 1 % risk is enough in any position to take. If we use more money in trading it becomes dangerous and chances of loss become more . It is possible to take profit or loss in any trade so should be prepare for both any time.
I don’t think so. It’s back to the trader himself because there are traders who are ready to risk high in order to take high return too but this is not good habit also. It is okay for traders who had small amount of capital but it will be bad idea for traders with big amount of capital. In forex, the most important is not only how to make profit but how to limit loss too. I believe that it is better to keep consistency on profit although it’s not big amount of pips than gaining big profit but it can cause big loss in return.
It is the responsibility of each and every trader that they should have their risk assessment done prior to taking up the trades such that they do not lose more money than which they can not afford to lose.
