Chapter 19
Ten Rules of Risk Management
In This Chapter
Limiting the financial downside
Getting a handle on human nature
Managing your market exposure
When people think about risk management in the context of currency trading, the natural tendency is to zero in on the risk of losing money. No two ways about it, that’s the ultimate risk. But traders can head down many different streets before they get to their final realized profit or loss address.
Throughout this book, I stress that risk management is a multifaceted process that ends only with the final trading tally. In case you skipped it, check out Chapter 13 for more detailed ideas on the various forms of risk. Sometimes, what you don’t know can hurt you.
How you navigate the avenues of risk has as much to with trading outcomes as it does with whether you ever reach the final destination. In this chapter, I group ten practical rules of risk management to guide you in your forex trading.
Trade with Stop-Loss Orders
Stop-loss orders are the ultimate risk-limiting tools. (The exception is data/events where stop-loss order executions may be subject to substantial slippage. Avoid that risk by not carrying positions into news releases.) ...
