Forex Trading? Any suggestions on how to reduce risk?
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The huge risk is there because of the huge leverage. I'm currently trading a mini account that allows 200:1 leverage. Yikes! How much trouble can we get into now?
Just because you "can" doesn't mean you "should" use leverage.
With $1,000 (buys one standard contract) I can control $200,000 worth of currency. But I could also put $200,000 into my account and trade one contract with no leverage. Or I could put $20,000 in my account and trade one mini contract with no leverage. Or I could put $2,000 in my accont and trade one micro contract with no leverage. Or put half a million in my account and reverse the leverage. You see? The risk goes way down when you reduce the leverage.
Without leverage, it is not any more risky than any other investment. Why don't more people realize this? They aren't looking. They're only looking at how they can get rich quick, the pot at the end of the rainbow, "The Answer."
You are one of the few people that approach forex from the risk standpoint (correctly). Most people are just thinking about how much money they can make, and lose it all very quickly.
I generally trade one standard contract for each $10,000 in my account. But with more experience, knowing the situations to leverage up, and when things line up with multiple reasons for taking the trade, I'll trade two and sometimes three contracts per each $10,000 in the account. Bottom line; you control the risk. My account was up 40% last month, and is already up 43% this month. It can be consistent, if you work out a plan and stick with it. My potential doubled or tripled and the losses are about the same as when I traded stock index futures for about 15 yrs.
A good trading platform, good executions, always using a Protective Stop, low spreads, are all ways to reduce risk.
Check out the references below.
Good luck to you.
No. It's inherently risky.
All investments carry risk. That being said, look for countries with stable economies, regulated (and enforcable) business laws, etc...
Personally, I think Romanian currency might be a good investment, especially if it becomes a full member of the EU in a few years..
You can minimize the risk by having some sound money management techniques. Focus on money management as this is something where most of the traders overlook...Please read more at -
http://the-forex-trading.blogspot.com...
visit http://netnew.tripod.com and search for online trading or finance page
Yes, if you know where to look. There is a group of people that I know of, inclusive of high calibre professionals, doing just like this. This time-tested approach is explained at http://www.myfreeforex.com.
Good luck.
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