3

Risk management for the forex trader

Risk should always be foremost in the mind of anybody trading currencies. When traders get a position wrong, be they private traders or the professionals, more often than not it is because they get their risk management wrong. Many, many investors who plunge into FX trading pay little attention to risk, or simply do not understand the sorts of risks they are taking on. They end up losing money, become downhearted, close their accounts, and go on to do something else.

Trading foreign exchange markets is not like investing in a mutual fund. Opening a trade and letting it run without having adequate built-in protection can cost you a lot of money. Nobody else is going to pay attention to your active positions. ...

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