Every successful business owner has their prime focus on one key element. It is none other than money management. To get a better return over your investment, there is a need for that. And we all love to get some income from any profession. The only way to ensure your business growth is by following proper risk management policy. The majority of the new UK traders are losing money in Forex since they don’t know how to manage their risk exposure. That is a very big thing when you are starting from the scratch. So, you as a trader, have to work with the best possible setup for the trades with proper knowledge of money management. In today’s article, we are going to discuss the three cardinal rules of risk management in the Forex market. The 2% rule of risk management Managing your cash flow and risk exposure is often termed as a money management policy. In trading, the risk does not come from the actual investment into the trades. The idea of it is totally fake. When you are going to set the stop-loss, it will be considered as a risk. The effort behind it will have to be right, from the very beginning because parameters of the trades will be somewhat influential for the risks. Unless you to take the most legit precautions for the proper setting of the trades, the chances you are high you will blow your trading account. So how do the pro traders manage their risk? The idea is very simple. Start taking 2% risk in each trade and you will be able to make a profit in the long run. It can be a little bit disturbing for most of the novice traders but once you start to follow this rule, you will see a dramatic change in your trading performance. Try to find high-risk reward trade setups in your online trading platform so that you don’t have to worry about the risk factors. Always remember that the outcome of any trade is completely random. Unless you trade the market with caution, you are most likely to blow your trading account. Not having multiple trades Now that, the sorting out of the risk per trade is done, it is time to work on the excitement. Actually, we are going to talk about controlling the number of executed trades. The traders have to be right with it because there will be zero patience in the trading mind when too many trades is running. On the other hand, there is a good chance for the traders to lose from all the trades. That is obviously not a good thing for the business. You need to reduce the number to the minimum possible. As a novice trader it good to stick to only one or mostly two running trades. Unless you have close the running trades, never execute a second trade. Taking breaks after losing a few trades Whether you have won some pips or lost some, it does not matter because trading is nothing but dealing with ups and downs. Just think about market analysis, it will take a lot of caliber from your mind to filter out quality trades. If you fail to use the chart patterns or the pivot points you are going to end up with a low quality trade setup. That can be easily considered as a good way to lose a trade. If you lose a few trades in a row, take a small break from your trading career. Trading the market with aggression will always result in heavy loss. Always remember, you are here to make money. So consider this profession as your business or else it won’t take much time to lose all your investment. Keep in touch with the professional traders so that you can keep yourself up to date with the latest market news.
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