2 Important Things to Remember When Floating at Forex
When trading forex, sometimes we have or hold open positions (open) for a very long time (commonly called floating), either intentional or unintentional. Well, we need to know and understand two things:
- Risk Management (per trade)
- Close Position Strategy
Why are two things considered important?
We will try to illustrate some mistakes when starting trading. Perhaps after reading this article, you will understand more about the importance of these two things. If we have entered into this situation (floating prolonged) then this experience will be important or have never experienced it, you must be prepared to deal with it.
As we begin our transactions and study, there are times when we are sure that trading will make a profit. Confident price movement in the direction of our position. But the confidence in the high-end will obscure the meaning of risk on forex trading. So even if you have the power / power, the loss will continue to mecnіng until the end of the world and eventually make big losses! Cut loss in large quantities.
Risk Per Trade
First determine how much you feel comfortable to take the risk of loss in any trade that you do. Determine at the beginning, many% (percentage) of risk per trade.
Let’s make some calculations. Such as funds in account for $ 100,000. If you risk only 2% of accounts in trade, then 50 consecutive transaction losses will remove funds in trading accounts for approximately $ 10,000. If you risk 5%, then the funds in the trading account will run out with 20 consecutive defeats. If at risk of 10% in each trade then you only need 10 times in a row suffered a loss trade.
Another example, such as you have the funds in the account $ 5,000 then with the risk of 2% per trade, this is the same with the risk of $ 100 per trade. 5% risk, you risk $ 250 per trade. Risk 10% then the risk per trade is $ 500.
Our recommendation is the risk used for 1% at 5% only. Exceeding the 5% risk per trade could be an overconfidence.
Close Position Strategy
There is the term ‘Look for the right market entry level but it would be better if it exits the market at the right time’. Until you open an open position, you must have a plan for how to close the position.
Here are some ways close position:
- Prices touch Stop Loss
- Price touches Take profit
- Using Trailing Stop
- Getting the losses that are still many (Cut Loss)
- Appearing opposite trade signal entry with open position (Hedge)
So, it is important for us to know these two things in the future so that we can not use them on everyday forex transactions.