There is a fine line between taking calculated risk and doing something dumb!

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Each week I recive a few messages about complete loss on account and no matter that I always write about the risk, it seams to me that’s not something interesting for the readers. I don’t know why, because it’s the most important issue in the forex market. I am not a magican and I can’t help each of you separately, it’s impossible. But I can always write about this problem and convince you to take this as you’re life depens on it. Sometimes it is, because losing of you’re entire capital for several times could lead you in to huge problems in you’re private life. As I see in your messages, the biggest problem in your trades is risk. I wrote about risk and loss in the separately page here in my blog, read it and after you finish it, read it again!

Here are the correct example of what are you doing. This picture shows more then words, right!? 🙂 Like it said, there is a fine line between taking a calculated risk and doing something dumb. If you cross that line to much, you’ll find yourself in trouble from which it is difficult to get out. I know because I tried it and experienced it a few times in my fx career, especially in the beginning. Low risk and loss is easy to cover, too big risk and loss it’s impossible to cover. Here is an example what it’s looks like when you risk and lose to much and what you need to do to recover it and to return to zero!

drawdown-forex

I know you are tempted with huge opportunities and earnings in the market, but you will never make money here if you risk and lose to much. Big appetite here carries a huge risk. If you want to make 500% quickly, you must take a huge risk. Huge risk leads to huge loss and eventualy you will lose you’re entire capital. It’s unwriten rule.

Be sure, that you can’t make 100,000 with starting capital of 1,000. But, based on my experience, you can make a 100,000 from 10,000 starting capital.  Yes you can, but not over night, in 3 years maybe. I wrote about that and how to make it here in my article. But, let’s return to risk.

You’re capital is you’re weapon in the market and preserving the same you always have the chance to win. If you lose it, there is no chance. During my 13 years long trading career, I’ve realized that, preserving the capital is the most important thing. Because, if you can control the risk, you can control you’re emotions. By controling the same you have a clear vision how to make money. If you lose the control and you will if you lose to much money from you’re account, you will trade with emotions and that is the road to failure.

That’s why everything start with risk, but only with calculated risk. For so many times I took a too much risk and lose, probably more times that you have open you’re positions in total and based on that, I can tell you that, taking a too big risk is definately road to failure, each and every time you try that. Because, you can succeed ones or twice, but in s long term, you will lose.

So, how much risk to take? Based on my experience, best strategy for small retail traders is to take no more then 0,3% or 0,5% for all open positions. Why? At first, if you lose it, it will be easy to cover. It will give you a control over you’re emotions as well and you will trade calm and confortable. And you need to stay calm all the time. With 0,3% risk in one trade, you’re target in one trade could be 1% with RR of 1:3 and that’s awasome gain for example one trading day. Trust me, it is! It’s a huge gain even for two or three days in average.

But, why I have the feeling that most of you have experience by making a huge loss and by losing you’re entire capital? Sure you are, everybody is. But, have you learn something from that? No!? Try with low risk and you will see that forex is not so dangerous and that you have the chance to succeed. Yes you can! 😉

Swissquote DEMO reklama

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One comment

  • Great Article…Sir I think you also Need To give chance some serious investor to join with you .i know you have no need But this is blessing if you do somethink like …Thanks

    Like

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