The Risk Management System in way of Picking right unit size on right mode of transactions…
Here in image you can understand the level of Risk in your taken Lot size with proper Risk & Reward Ratio.
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Trading strategy is very important in forex trading. However, after creating a strategy I always beck test it. If it can generate minimum 5% profit of my capital, I apply it in real account.
what you think there is any difference between money and risk management ? its all about same strategy or any major difference ?
mate its too much difference in Money Management and Risk Management… Talking about the Money management it include the Diversification of your investment on which the risk will remain the same but you will get multiple earning ways…
While in Risk Management the diversification will be of your Risk into different segment with proper asset allocation of your Risk Reward.
For example… If you invest in Forex and with that you invest in Crypto as well… this is your money management but if you invest in Forex on particular pair like say EURUSD so the unit size of your trade will play the role of Risk in your portfolio.
Hope you got my point.
I never risk more than 1% per trade. It’s the golden rule that I follow.
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Risk management is an important tool in the forex market. Never risk more than 1-2% of your total capital per trade.
its not like that… If you are limiting your risk into 1-2%, that means you are limiting your opportunities too…
You just need to identify the opportunities where you can take high returns. this is what a successful trading plan
Well, I got used to think that lot size depends on you r personal risk management strategy. Of course, some people prefer to take too much risks on them but it also depends on their attitude toward trading actvitiy. In my opinion, lot size depends on your deposit and should be no more than 5% from your total deposit. However, some traders can trade on full deposit and even with leverages and they acquire solid susm of money. The correlation 1:3 is the best choice for every category of traders whether you’re a novice or a professional trader. It doesn’t really matter in this case.