Baca Juga
For forex traders, recognizing risk is as important as targeting profit trading. Successful trader Paul Tudor Jones even said, "Don't focus on making money, focus on protecting what you have". So to be able to successfully survive in the forex market, risk management is a key that must be owned by all traders.
But the problem is, many traders are still confused about determining the ideal risk tolerance limit. According to the author's observation of Babypips, this topic is one of the most popular topics in forex forums. Some solutions offer a number of 1% to 2%, but some specifically suggest a 5% risk per trade if you adopt an aggressive trading style. Now the question is, is it really easy to determine the risk limit?
If you don't want to be bothered and prefer to use shortcuts, then the recommendation can be applied. But if you want to be profitable in the long run, then measure the risk tolerance limit according to your personal conditions. Well, how do you measure the suitability? The following four exact ways will reveal the answer.
1. Get to know your Trading Goals
Do you have a fixed income outside of trading? Or is trading profit the only source of your income? If it aims to make trading as the main livelihood, then it's better to just choose a small trading size. Why is that? This is related to psychological risks that will burden your trading.
Let's say you intend to rely on life from trading, then there will be a requirement to meet profit targets whose amount can be used to pay bills and meet other living needs. Trading under such pressure will obviously make mental very vulnerable to fear and greed, the two most negative trading emotions that can destroy your account. Therefore, it would be better if you reduce the risk per trade by taking a minimum trading size. That solution can ease your trading burden, and secure your account from large losses.
Meanwhile, if it only makes trading a side job, you can more freely determine the risk tolerance limit. Because the main income does not originate from trading profits, the loss will not have much effect on your financial condition. In addition, you can also learn to manage risk management and improve trading skills more freely, given that there is no demand for obligations to meet certain trading targets.
2. Measure from the amount of capital
How much is your initial investment? This is the second question that you need to answer to determine the risk tolerance limit. If you start trading with large funds, it doesn't matter to take large lots. But if your initial deposit is relatively small, it's better not to use standard and mini lots. The reason is none other than to protect the account from the risk of changes in price volatility. If you are not able to adjust the amount of capital with a lot of trading, the slightest increase in volatility will potentially bring the risk of margin call.
3. Adjust to experience
If you have been poor in the forex world, then you will have more confidence in instincts and trading decisions. In this case, trading with a big risk will not be a problem. Precisely by increasing the size of trading, you can be said to be ready to "go up the class" from just a newcomer trader, to an experienced trader.
But on the contrary, don't try trading with a large risk tolerance limit if you still lack experience. For the record, a long time the ideal trading experience is not determined from a certain period, but your ability to escape the influence of emotions. So, even though you have been a trader for a long time, you are not recommended to increase the size of your trading if you often make emotional decisions.
4. Condition Trading Risk according to Comfort
Do you know? Risk measures are not static because they can be adjusted to the comfort of your trading. For example, you can apply the risk limit per trade at 1% as a prefix. If for some time after trading you feel burdened with these sizes, then it's fine to reduce the size of the risk.
On the other hand, you can also increase the size of the trading if the profit prospect is deemed not to 'trigger motivation'. It's just that, make sure that the decision has been carefully considered taking into account the three previous aspects. Because if not, that means you will only increase the size of the trading without a clear basis, or just chase profit because of the greed factor.
The final word
Whatever traders say out there, there is no definite formula in determining the ideal risk limit for each trader. A 5% risk measure of capital might be tolerated for professional traders, but it could be too big for a beginner trader. So it's better, measure yourself the risk tolerance limit based on your personal conditions. That way, you can optimize the trading results to obtain the desired profit consistency.
Tidak ada komentar:
Posting Komentar