Risk management

As with any other trading or investing activity there are risks associated with forex trading. So do consider the risks before entering it. You are free to choose a risk or non-risky trade. Here we will tell you how you can manage risks and potentially avoid losing money rather quickly.

Conservative trading would mean that you place fewer trades over longer periods, with smaller lot sizes, strict risk management, and modest profit targets. You can use limit and stop-loss orders to reduce the risk involved in forex trading. Since the forex markets are open 24*7, it's hard to follow it on your computer or even your mobile devices. It could simply move the other way when you are sleeping. Limit and stop orders automatically close out open positions (or open new ones) when price reaches a certain level.

Limit orders are used to close a winning position by closing it out at a predetermined price once it reaches it. For a long position, a limit order is placed above the current price. If you hold a short position, then a limit order will be placed below the current price.

In quite the same way a stop order is used to minimize losses. For a long position, a stop order is placed below the current price. If you hold a short position, then a stop order will be placed above the current price. Also known as a "stop-loss order", it's purpose is to close out a position in which the market is moving against you, limiting your losses on a trade.

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