Forex trading and how to manage your capital
Last Updated on December 21, 2020
Before starting Forex trading, you need to know the meaning of an investment portfolio is a sum of what a person or company invests in, and it includes a variety of financial assets such as stocks, bonds, currencies, and others. Portfolio diversification is one of the most important foundations of capital management and one of the most important reasons for success in the forex market, along with managing financial risks and controlling the psychological factor in trading.
How to manage your capital when you start Forex Trading
- Management of leverage during Forex trading
After the investor determines the capital that he will start trading with, he must determine the size of the contract with which he will trade in the sense that the trader must adjust the size of the financial leverage, so that it is limited between 3 to 5 times the value of the original capital and not more than that. The size of the leverage increases the risk and vice versa.
In this way, the trader has chosen to start trading with a small amount of his total, and he has also chosen leverage with very low risk, but in return, it increases the value of his profits.
- Managing the risks of trading by adhering to stop-loss and profit-taking orders
Trading orders are the lifeblood of investors, as they determine the size of the loss so that it is within the reasonable limits acceptable to the trader, and it is also very useful in that it saves a lot of time and effort for the trader, as there will be no need to stay in front of the screen to follow the price movements.
In the lessons in which we will explain the different methods of analysis, we will certainly explain in detail the correct ways to place different trading orders, in a way that helps the trader to achieve his goals and reduce losses as much as possible.
- Not to risk more than 5% of the value of the investment portfolio in a single transaction
In the financial markets, in general, the trader should not risk more than 5% of the value of his capital in one trade. Equally, the trader should not covet too much and come out with profits also in the range of 5%.
How many profitable deals have turned into losing deals because their owners covet a lot of money? Contentment, as they say, is “an indestructible treasure”, and a few by a few are many, and the financial markets daily have dozens of opportunities that a trader can seize and get out of them with a good profit. Therefore, it is not reasonable and logical for an investor to wait for huge profits from only one transaction.
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