Скачать или смотреть Valutrades Basic Trading Course - Lesson 21: Risk Management

Welcome to the Valutrades Basic Trading Course!

This is a series of videos, designed to launch the journey of beginning traders, in every aspect of trading, with Valutrades.

Free FX Trading Signals from Valutrades: www.valutrades.com/en/trading-signals

In this video, let’s take a look at Risk Management.

In our last video, we showed you how to open a position.

However, if you are not careful, you can easily blow up your account and today we will show you how to avoid this.

The first thing you need to do is to determine your risk and to set the correct position size.

In normal trading, we do not want to risk more than 1% of the Account Equity on each trade.

In this account, we have 4,250 USD so our maximum risk should be no more than 42 USD.

We have decided to Buy EURUSD and we want to set our Stop Loss at 100 Pips below our entry point.

The Stop Loss is like a safety mechanism for your account, just in case the trade does not go as you predicted.

With EURUSD, the Quote Currency is the same as our Account Currency so the calculation is quite simple.

Each Pip on our chart equates to $10 at 1 lot.

So, our 100 Pip Stop Loss, at 1 lot, would carry a risk of $1,000 which is too much, of course.

Therefore, we divide our desired risk of $42 by $1,000, and we get 0.042.

As we saw in the last video we may enter the position size here, or right-click and select Trading, New Order, and Market Execution.

You may enter your Stop Loss and Take Profit levels manually, or you may just click Buy by Market.

Now that we have entered a Long Position we can click and drag the Stop Loss level below to our desired 100 Pips and our $42 maximum risk.

Now, we can do the same in the other direction, to set out Take Profit.

This is the level at which the position will close, creating a profit for us of $120.

In rounded numbers, if our Take Profit is $120 and our Stop Loss is $40, then our Risk:Reward Ratio is 3:1.

Your trading plan should always include this figure, as a goal, and it should always be higher than 1:1.

We will explain more about Risk:Reward in other videos.

We will also explain, in other videos, how to calculate Position Sizes for currency pairs where the Quote Currency is different from your Account Currency, and for symbols like Gold, Oil and Indices.

That’s all for now.

In the next lesson we will be looking at the MT4 Terminal.

Happy trading with Valutrades and we will see you soon.

CFDs and FX are leveraged products and your capital may be at risk.