Risk management tools and techniques

Trading in the FOREX market is exciting, but what makes it so exciting is what makes it risky at the same time: volatility. Some trading strategies depend heavily on this volatility and trade at high frequency in the hope of taking advantage of it, but exposing the capital to volatility can lead to losses.

However, there are ways to protect your assets from volatility: with a variety of tools and techniques, you can manage and export them only to the level of risk you know. First of all, knowledge is the best risk management tool that every operator has in his arsenal. If you know which economic and geopolitical events have taken place, will happen or will happen, you can dynamically adapt your strategy and business objectives and execute them if necessary.

Find out when the lever is your friend
Leverage is a tool used throughout the financial sector and very often in FOREX, remember that leverage can multiply your profits, but it can also multiply your losses. It's only because you have access to a high leverage that you know when to use it to keep you from crossing the risk limit.

Custom notifications
Some trading platforms allow user customization in the form of EA (Expert Advisor), programs that can perform various functions in the trading environment. One of the features that EAs can do is send notifications to traders if their position or instrument exceeds the established price levels. Some EAs even allow positions to be closed or opened automatically, but this automated process can expose you to even greater volatility caused by unexpected geopolitical events or a sudden change in market sentiment, so it's important to pay attention. when in use.

Become your therapist - corporate psychology
A commonly used term, simply said, is to enter or exit a position or act too early or too late, which leads to unfavorable results. A good example of this often occurs when an instrument is removed but not completely reversed, causing the trader to panic and exit a transaction to see the price of the instrument recover immediately afterwards. Another example is when market sentiment raises the price of an instrument, causing traders to jump on a "train" blocked at the station (in this analogy, the station is the current price of the instrument when you open the position).

Be your director - discipline
This may seem like a more applicable advice to a mystical form of martial arts, but if you ask an experienced investor, he will no doubt cite the "discipline" as an important element in achieving your investment goals. Developing a strategy that defines both your goals and your risk appetite is only useful if you stick to it. Having a twisted reaction to sudden market swings is almost a sure way to expose yourself to unexpected and unexpected risks.

Safe ports are your friends - during market volatility
A few years ago, George Soros wrote that gold was the final bubble, but a few years later, he invested in an SPDR Gold Trust with excellent results. Currencies and safe raw materials have been the vehicle - well, a refuge - for serious, experienced and competent investors in times of unstable markets. What is the best manual for getting a page from the book of serious investors, like Soros.

Stop loss limits
This is a tool commonly used by risk management traders: it is a user-defined level that automatically closes the position when the appropriate loss level is reached. For example, you can set the stop loss limit at 10% less than the price the instrument had when you opened the position, exposing only that equivalent of your initial capital to this loss (plus brokerage commissions generated by open and closed positions) ).

DealCancellation - Cancel a losing offer
Most brokers offer solutions to minimize risk exposure, but easyMarkets offers traders the opportunity to lose with a single click. If the stop loss is reached before reaching the limit of the contract cancellation period and the invested amount is still obtained. When you open the transaction, click on dealCancellation and you can cancel your order within a set period with a small commission.