moonchild
VIP Contributor
Whether you're old or new to forex trading the idea of risk management is not new to you, you have read or even watch some videos that teaches this concept but even with all of the enlightenment surrounding this topic many people blow their accounts every single day.
My assessment is, most people that failed to incorporate risk management into their trading, started out with a small capital which makes it very difficult to manage, imagine you started trading with an account of 50$ and your risk management tutor told you to risk one percent of your account for each trade, how much do you think is the one percent of 50$ to start with, it's not possible at all.
The idea behind risking 1% is that, it will maximize your wins and minimize your losses, if you risk just one percent of your account for each trade, it will take you 100 trades before you can blow your account and hundred is quite a huge number and I don't think even a beginner can take one hundred trade and fail, so you see it's a numbers game and risk management is very important.
For example if you have a 1000$account 10% would be 10$ which is okay per trade using the lowest lot size. Your trade will have enough room to breath because your stop loss will a bit far.
My assessment is, most people that failed to incorporate risk management into their trading, started out with a small capital which makes it very difficult to manage, imagine you started trading with an account of 50$ and your risk management tutor told you to risk one percent of your account for each trade, how much do you think is the one percent of 50$ to start with, it's not possible at all.
The idea behind risking 1% is that, it will maximize your wins and minimize your losses, if you risk just one percent of your account for each trade, it will take you 100 trades before you can blow your account and hundred is quite a huge number and I don't think even a beginner can take one hundred trade and fail, so you see it's a numbers game and risk management is very important.
For example if you have a 1000$account 10% would be 10$ which is okay per trade using the lowest lot size. Your trade will have enough room to breath because your stop loss will a bit far.