The above-described concept includes only a theoretical aspect. In practice, there are cases when the market comes to a standstill, thus keeping the trader in another price range until the optimal moment of exit.
Avoid future failures can be, using the most rational definition of risk, however, for clarity, consider imagine that out of the market will be at the decision.
Based on the foregoing, it is appropriate to calculate the risk of the following equation:
1. Risk in currency terms equal to the difference between the inlet and outlet of the price of the market, which should be multiplied by the number of contracts or shares based on the fee.
2. Percentage of risk is calculated as the price of the output divided by the price of entry. Next, subtract the result of one and multiply it by -1. The next step is the calculation by dividing the sum of commissions on the initial amount invested. The resulting amount must be added to the previous figure, and multiply by 100.
Trading on short positions, to calculate the risk ratio, in percentage terms in the formula of the last equation the price of entry and exit should be reversed.
It should be understood that even the most efficient of proven theories is relative. Losses at work on a currency exchange are inevitable. Along with that each trader has a set of features to minimize potential losses in the process:
• Closing of the transaction or not at the entrance to the market;
• The sale of the open positions or buying less currency in the original acquisition;
• Increase (decrease) stops to reduce the risk to the maximum permissible level;
• As a market expectation at the time of the stop and the most appropriate implementation of the operation at this point.
Option number 3 is the most tempting, especially in the case where a trader confidence in a favorable outcome of the transaction. However, increasing the level of stop-oredra limits opportunities for the conclusion of good deals in other directions, such as "maneuvers" will be limited to the extent set foot.
The fourth option is considered to be the most prudent method to open the majority of positions. Along with that the trader does not have to overcome the small number of not recovering breakthroughs. Since most of them are false character, in the circumstances experienced market participants prefer to wait for additional data confirmation. It was only after the development of clear signs of a "correct" market interest spread for the trader can apply for closing.
In summary, we can conclude that one of the main reasons for the failure of new traders can safely assume that the lack of strategy and tactics of control potential risks.
Have such a plan should be mandatory and is best to put it on paper and put in front of him. Each transaction should be seen only as working time. You should not enter the market without knowing when you plan to leave. Must immediately leave the auction or by fixing the optimal size of the profit on the transaction or stopping the losses as low as possible.