Risk management in forex trading episode 1

dmgmwenda By dmgmwenda, 24th Aug 2011 | Follow this author | RSS Feed
Posted in Wikinut>Business>Investment

this episode talks about risk management which is a key thing in Forex.i have expounded on the risk management aspects and will give more on my following episodes.read more for more information

Risk management in forex trading episode 1

This one of the most important part in Forex trading ,why ?since we are in the business of making money we need to know how to manage risk or losses .but ironically this is the most overlooked areas in trading .many people wants to get into a trade without being keen on their total account size. They simply determine how much they can stomach to lose in a single trade and hit the "trade" button. There's a term for this type of investing....it's called... gambling
When you trade without money management rules, you are in fact gambling.
You are not looking at the long term return on your investment. Instead you are only looking for that "jackpot".
Money management rules will not only protect you but they can make you very profitable in the long run. If you don't believe us, and you think that "gambling" is the way to get rich, then consider this example:
People go to Las Vegas all the time to gamble their money in hopes of winning a big jackpot, and in fact, many people do win.
So how in the world are casinos still making money if many individuals are winning jackpots?
The answer is that while even though people win jackpots, in the long run, casinos are still profitable because they rake in more money from the people that don't win. That is where the term "the house always wins" comes from…..Watch out for the coming second episode of risk management

Tags

Forex Investment, Forex Trade Currency, Forex Trading System, Risk Management

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am a nature loving man,i have passion for photos and internet

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Comments

author avatar M G Singh
26th Aug 2011 (#)

Interesting post

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author avatar Lateral Thinker
30th Aug 2011 (#)

I guess ita abit like insurance, the companies pay out yet still make huge profits ! How there are thousands of policyholders who dont claim ...so though its a gamble on part of the insurance companies i think the dice are loaded in there favour, Interesting read !!

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12th Jul 2013 (#)

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