Risk Management in Trading: Safeguarding Your Capital
Intermediate
Overview
We’ll cover the fundamental concepts of risk management, including determining the amount of trading capital you need, understanding drawdown and maximum drawdown, and utilizing the reward-to-risk ratio. Are you ready to take control of your trading risks and optimize your returns? Let’s explore risk management now!
Course Video
Video Summary
- Risk management involves strategies and practices to protect trading capital while maximizing profit potential, crucial due to high volatility and leverage in forex trading.
- There are 11 componenst of risk management.
- Professional traders often suggest starting with $10,000 to $20,000, but the amount depends on individual circumstances and trading approach.
- Drawdown is the decline in your trading account balance from its peak to its lowest point, a natural part of trading.
- Risk reward ration explains the fundamental concept to assess potential profitability and risk of a trade by comparing potential reward to risk.
- Also let’s learn a little about position sizing, leverage, diversification, emotional discipline
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