High Risk Trading or Low Risk Trading?
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  1. #1
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    High Risk Trading or Low Risk Trading?

    Most of trader's are struggling in forex trading market, and wrong and poor risk management is one of the big cause of it. Its very common that all trader's have to take risk to make money but most of them not able to calculate it properly that how much risk they have to take in each trade.

    Risk factor is very important element of our business. And its very important to learn that how much risk we should take in the market. There are many types of trader's in forex market they have their own characterstics, Many trader's want to make big massive money by taking high risk and some of them want to focus on consistent money making goal by following very less risk for their each trade.

    We can read everywhere all over the internet that there is risk in forex. Without taking risk we can't make money in forex, that's true but trader's should understand the value of low risk trading in forex. By taking a very high risk trader's are making this business more hard and dangerous for themselves. There are many trader's who are working more than 3 to 4 year's in forex but still they are not able to make consistent profit. A trader should have good idea that what should be the level of risk for his or her trading style.

    Now the main question is how much risk a trader should take in trading and How he can know much about it?

    First of all a trader should spend a lot of time in demo trading account, Some trader's say that spending a lot of time in demo trading is useless or waste of time for them. But I am not agree with them, a trader should have a good idea about his risk, We should test our trading strategy for couple of months and should check that which type of risk size working fine with our strategy like 2 percent risk per trade, 3 percent risk per trade, or 5 percent risk per trade. I would like to discuss couple of exmaples regarding it.

    Example:
    Trading account size: $2000

    Suppose you are following technical analysis (support and resistance) in your trading and you are using h4 time frame for your trading analysis, You opened an order in 4 hour time frame chart with 30 percent risk of your account means you are taking risk of $600 equity for one trade. Even you risk and reward is good like 1:1 or 1:2. But are you sure that this type of trading will give you any success for long term time?

    The answer is no, I don't think that by taking 30 percent risk of our account for each trade we will able to make consistent income, because we have only less than 4 chances to place our trades in the market. There will be no much money for 4th transaction in our trading account. We can loose all our three continue trade's very easily in the market, its very common and can happen to anybody.

    Example 2:
    Trading account size: $2000

    This is the second example, Suppose you are following the same analysis like Example one as I mentioned above, but in this analysis you are taking only 2 percent risk of your equity for each trade. It means you are taking only $40 risk for each trade, it means we have a lot of margin for your next trades, you have total fifty trades margin in your account. Yes, that's awesome, And by following this type of risk management you can surely get a good ouput from your trades.

    Bottom Line:
    Hope you all get a very good lesson about Risk management from this thread. Guy's nobody can make a big profit consistently by taking very high risk, so in my opinon we should take 1 to 2 percent risk of our capital for each trade. Stop gambling and be a good trader, Have a good time.

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  2. #2
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    What I believe in this market trading is still the plan the trader is using to trade. When the plan is good, things will surely work with the trader. The high risk is nothing to some traders, it would even make them get more money when they have their management with it. The low risk is good too, because it would make the trader have a longevity and assurance of trading. But in all, the system to use, the management and discipline can make nay risk worth it while.

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    Quote Originally Posted by cozard007 View Post
    What I believe in this market trading is still the plan the trader is using to trade. When the plan is good, things will surely work with the trader. The high risk is nothing to some traders, it would even make them get more money when they have their management with it. The low risk is good too, because it would make the trader have a longevity and assurance of trading. But in all, the system to use, the management and discipline can make nay risk worth it while.
    Good planning can help trader trade more efficiently. Yes Forex trade can be a money making machine if and when a trader turns it into one. Until then, it can be such a waste pipe and that is exactly what it is to many wanna be traders. There is hope though, anyone that plans on succeeding in forex must never come to the market with half baked knowledge.

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    i guess everyone plays like to work with the binary options betting to spare the use of margin with the spins on dividing to some numbers of stacks with the chance on working out.
    i use the one as to put the length on resistance with the use of the margin and leaves to wait until position will be closed without to work of the SL.
    now with the trailing stops function comparing with the quote from the famous scalper trader to remind the use of SL only with the trading.

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  5. #5
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    It is neither high risk nor low risk trading that is always best. The trader should chose to trade according to his risk capacity. For instance if we deposit $1000 and open just .01 lot to keep the risk low, that would be boring. The profits we generate with such small lot will not justify the amount we invested. Again if we open 3 or more lots with $1000 then that would be too risky. it will make trading a stressful and dangerous venture.

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    Quote Originally Posted by PROPENSITY100 View Post
    It is neither high risk nor low risk trading that is always best. The trader should chose to trade according to his risk capacity. For instance if we deposit $1000 and open just .01 lot to keep the risk low, that would be boring. The profits we generate with such small lot will not justify the amount we invested. Again if we open 3 or more lots with $1000 then that would be too risky. it will make trading a stressful and dangerous venture.
    Good explanation sir, by reading this post everyone can say easily that forex trading is not a very risky business. Its totally depend upon us that how we are taking risk here and which lot size we are using in trading. Most of trader's use a very big risk and lot size with $1000 capital on the other hand we can make our trading very easy by using 0.01 lot size in $1000 investment.

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    Quote Originally Posted by Khimi234 View Post
    Good explanation sir, by reading this post everyone can say easily that forex trading is not a very risky business. Its totally depend upon us that how we are taking risk here and which lot size we are using in trading. Most of trader's use a very big risk and lot size with $1000 capital on the other hand we can make our trading very easy by using 0.01 lot size in $1000 investment.
    i guess we do not need to take the lower risk for trading for our safety and even just a wasted time and also will not grant to get success too, all the thing here depend to us who manage the business with well, how good the understanding we have had to analyze the market, how good we can handle and recover some condition
    and the important thing for us that we only need to trade with flexible and realistic to follow the market, never jump to get one stage in front of the market price, so set the risk wisely,

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  8. #8
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    Quote Originally Posted by newentry View Post
    i guess we do not need to take the lower risk for trading for our safety and even just a wasted time and also will not grant to get success too, all the thing here depend to us who manage the business with well, how good the understanding we have had to analyze the market, how good we can handle and recover some condition
    and the important thing for us that we only need to trade with flexible and realistic to follow the market, never jump to get one stage in front of the market price, so set the risk wisely,
    we know forex trading is high risk, Loss is the probability , because the price of which is always moving and dynamic.* We then loss of open positions, do not panic or shock, because when we open position fixed price move and our position is not in line with market movements, but if we believe the analysis that previously had been carefully considered and carefully we will get a profit, wait only a matter of time waiting for gradual loss into a profit.

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    Forex is an international business. It is not a game. It is a money making making business. Sitting in the native country we can earn dollar. There is a good saying-----no risk no gain. But risk should be taken carefully. Otherwise your account will be zero.

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  10. #10
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    Quote Originally Posted by Sonia View Post
    Forex is an international business. It is not a game. It is a money making making business. Sitting in the native country we can earn dollar. There is a good saying-----no risk no gain. But risk should be taken carefully. Otherwise your account will be zero.
    Well, the forex is good, but we should try to be more careful in its dealings, the risk is what we should be very careful about. I would mainly advice traders that the risk taking should be very little, if the risk is little , then it would guaranty the safety of the trader. Also, I so much believe in the way the trader pans to manage his risk.

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