An in depth look at

Risk Management
Risk warning - these training tools are ultra-sophisticated techniques and
comes from a place where one can either lose money or gain in a Rapid
offshoot so one need to take the personal responsibility and concentration on
how one can understand that how the trading analysis and techniques work
and put the amount of money that he or she would be able to afford while ever
lost providing this eBook for general information should not be used as a
personal guide foreign investment advice to be used.
 TABLE OF CONTENTS

Introduction Why should you care Taking the Bull by Introduction

Understanding How to minimize
about Risk
the Horns Risk in the Market Losses
Management?

Page 01 Page 02 Page 03 Page 01

Page 04 Page 05

it’s a matter of Trading is about Risk and Reward Introduction

Conclusion
chance, so have knowledge, Risk
fun Management is
About Luck
Page 06 Page 08 Page 01
Page 09
Page 07
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Introduction
Management of risk in trading is frequently not taken into account generally, but very
insignificant in the case of trading through forex. A number of renowned brokers generally
focuses on solutions which are strategic and can be able to communicate through signs that
when to start trading in stock, crypto currencies or commodities, in pleasure of being engaged in
collecting wealth they just ignore some warning against certain acts.

This is very important for the broker to know that when he or she has not involve in various
trading, it is a significant ability. This can be a topic of debate that it is more significant to
manage risk of trading as most of the brokers are not involved in any sort of commodities. The
skill of analyzing the risk is very important for a broker to get the favorable outcome or they may
give up trading in various commodities.To be more enthusiastic or having low motivation for
trading, a broker is extremely for too many options in trading and experience an eye opener of
various risk present in the stock market and faces a gradual decline.

This decline makes the broker realize but he need information on market risk, its management
that how the risk can be managed. To learn by gathering different information from different
platform and imbibing them in his mind perfectly that broker will surely reach to its highest
pinnacle of success.
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Why you should get about this management?

This is so obvious, that the broker is very by the brokers which states that at what
much exposed to various platforms of time the broker has to deal in and has to
stock which is an essential part of trading. stop which is very essential. Generally, the
This can also be explained statistically brokers who were losing for becoming
that analysis of the risk is how much unsuccessful was because they were
essential and how this can impact our discussing their trades on a larger level
trade and of extreme importance that how that is when they need to come out from
this can be advantageous or beneficial. their trading market. We can say that
those brokers were poor in measurement
There was a research done in 2013 which of risk in market.
is conducted by majority of NYSC listed
It's not a surprise that this too we have This all make the traders more susceptible and refuse to
forex on the large number of consumers
studied in psychology, human nature or acknowledge the risk and its management. Here, we need to
and depicted that at the middle of
behavior of an individual cannot judge the intervene and need to take few steps towards necessity of risk
statistical scale the rate of purpose
risk in taking actions or may face management where that can be felt.
fulfillment with each was nearly 67.2
percent. This shows that the percentage of difficulties in analyzing the actions in right
So, to keep an eye on that the loss should not be greater than the
successful closed trades with some or wrong direction. Individuals are also
revenue one makes. As the end of the result one need to get that
benefits has happened because of the bad to understand that how likely their
how Forex can be profitable. Thus, management of risk is very
right decision at the right time prediction will occur and how favorable
important and embedded part to trade in various commodities and
their decision will be.
market strategies.
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Taking the Bull by the horns

Possibly, the strongest challenge when this is about various commodities
within dynamics of market has to be taken very seriously. Yes, market
dynamics have as a necessary feature of excess thought about loss.
Ironically the traders in Forex are hopeful for their prediction and invest
their time in thoughts like the glass is half full or empty. But this also does
not help in reducing the risk.

When one starts as a broker the market is totally and non-familiar and
psychologically what is non-familiar makes us afraid and the broker got
filled with fear from non-familiar. The commodities are same for all which
can't be confirmed that what will be going to happen in future. Because of
this the market will not perform well, people will invest less and few people
will wait or hold to trade. Strongly they will oppose the risk.
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Understanding Risk in the Markets.

Market means taking and making decisions. Everybody wants
to make the right choices and there are certain tips and tricks
to do that, and either you take the right one or the wrong one.

Statistically right choices are mostly made and risk

management dilute the wrong choices as we don't know
what's stored for future. So a significant amount of balance
should be there in between what we gain and what we lose.
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Thus maintaining the profit and loss ratio to be or lack of experience or you are going to again wake
2:1 or 3:1 so as to be a better trader. yourself up and start taking your experience as your
learning and will try to make out for your losses. Are your
A. The Trader is where it starts - Your entrance psychological instincts allowing you to take requisite
to the market of trading opens your door for amount of risk?
checking out your skills of risk management. It
depends on you whether you are going to put B. You are Your Mind - Risk management is not only about
your higher stakes for trading thus increasing the right calculation but also about your reaction to a
the chances of risk or putting a lower amount particular situation given. Most people get trapped in their
of money on a monthly basis. Both ways have own thinking, but how and why? For example a person in a
their own merits and demerits. demo trading is doing really well applying all the skills, but
when it comes to live trading the person suddenly loses all
The first thing should be very clear to you what
the money with the same skills. At that particular case,
your financial status is. But to motivate yourself
person use to blame the broker considering this as a
you need to look out the best case of the
tactic to trap the innocent. But there are others who are
trading system along with the worst case

How to Minimis Losses which is generally the neglected one.

doing well along with them. Then what's the difference, it's
their psychological biasness towards nervousness which
hampers their decision making ability, thus becomes more
Keep one thing very straight in your mind is of
There are many books, sites to give you tips and
your finances, the amount you can afford. hesitant, stop focusing on losses and many more. Thus
tricks related to risk management. Trading is in all
Generally we become greedy without focusing they end up losing more and more.
total a risky task to do. Money management,
on the loss we keep on putting money at risk. .
exposure and risk is a very important part of trading. The overall explanation is just to make you aware of the
Have you ever thought if your account drops to
The one and only tip is profits should be more than factors which can obstruct your trading, so better focus on
zero, are you going to leave trading it may be
the losses. But many factors are there which hamper the risk management and your own thinking, your decision
due to the possible wrong combinations like
the trading work like trader's psychology, making ability by thinking rationally of each and every
bad luck,
circumstances etc. factor possible.
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it’s a Matter of Chance, so Have Fun

One of the best trick to improvise your risk It makes us strategically prompt by
management skills is by going through the game understanding the probability, the
theory. Two major aspects of trading are randomness, the differences, and
knowledge and luck. When we take decision we try understanding the pattern how the
to have an in-depth knowledge of the market, trade works. But for counterattacking
technical analysis, economic knowledge, perfect the loss made, you need to
strategy and skills. That's enhances your chance of understand to have a backup plan
winning. always. It means when you don't have
a plan still you have a plan this is
But there are many uncontrollable factors like -: what understanding the risk all about.

1. Sudden withdrawal of vast amount of money by And you have to be a long term horse
bank. not a onetime player just to make one
trade and leave. Rather focus on the
2. Misunderstanding the futuristic effects.
amalgamation of large amount of
3. Any kind of sudden war penny by doing a number of trades.
This will improvise your game skills
The Solution is in the Game Theory and keep you in track
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of why and how to keep things in minimal amount chances of maximizing the return amount. Below 2% you are
to set the perfect stages. losing probable chances of gaining the money and above 3%
you are inviting potential risks of losing your money by
Let's take an example to gain some profit, to get getting the sum of many bad lucks. But risking of 3% of your
something you should have the guts to take some penny, can escalate your amount to 33 trades in a
risk, tossing a coin is the best example. You have continuous fashion before declining your amount.
1000$ and if you toss it and gets head you will bear
a loss and if you get a tail you will make thrice the C. Don’t Forget that it’s Personal - These are statistical
money. Just like that it's a real probability, if you approach of doing, but it might vary from your way of trading.
keep on doing you might gain a good amount of Thus it is very necessary to understand the logic behind the
profit. amounts that are advised to follow, so that you can use it as
well. For example, if you are a very careful trader, you might
B. It’s not all About How Much You Win - There is a get profit from the larger trading’s, if you want to pursue each
minute problem, if you have in total 1000$ and you and every work this market is offering you, then you might
take risk on the whole, there will be a high chance
choose to keep things on the smaller side to reduce the
of losing them all and you can't be able to get your
probable risk.
Trading is About Knowledge, money back in any way. Better take risks in your
limit, say 50$ and thereby decreasing the To avoid risk you have to face this which is a very tedious
probability of getting heads all by chance and thus
Risk Management is About Luck reducing the account.
task to do. Authors might be rude to you, for example it is
very necessary to keep a check on the losses so as to
decrease the amount of losses, but what's the amount?
A. The Tools -Certain tools like margin needs, But luckily we have Forex, which statistically helps
advices from the experts which are there to increase us with our trades to take judicious amount of risk But it completely depends on the person on their unique
your efficacy and let you get out of the losing in a particular trade, thanks to them for tracking ability to trade, better you learn the way to tackle the stop
trade.For drawing that perfect line you have to zillions of accounts that too for such a longer loss principle, so that you adapt yourself into that rather than
understand the basic principles duration. Taking a turn in between 2% - 3% focusing on a single number and applying it.
enhances your
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Risk and Reward

Most honest and practical thing to know is that every rather than putting a whole lot money and losing them
investment works on the principle of creating a all.
balance in between the return and the risk that has
been taken. If there were no such risk involved, each B. Low Risk Isn’t Always the Best Idea
and every person would have been a part of trading
It's not important that if something works for majority of
and there would have been no such existence of
time it's the best always.
market and its ethics.
Second way is trading frequency, maintaining the rhythm
The sole purpose of Forex is to safeguard you by
by trading meagre amounts will help you grow and will
reducing risk. The primary goal of business is to invest
decrease your chances of losing.
by considering the currency. But being a Forex trader,
your main goal is to amplify your caliber of reducing
Like if you are having a strategy that works for 70% of the
risk while exchanging money, so as to get the optimum
time it means 7 days out of 10 you will earn.
benefit.
In case you consider another strategy with 50% efficacy it
Thus your risk and your chances of gaining profit is might sound less interesting but can bring 80 signals per
directly proportional. More the risk, more the chances day, it means if you are losing 40 you are gaining 40 as
of winning. But you have to develop your management well.
skills of reducing risk.
But which one is better you have to decide. If you don't
A. Risk Avoidance Schemes - The best way to avoid
have the skill to manage the risk you would probably
risk is to put a smaller amount of money each month
choose the 70% option but other person with better risk
to grow your account, though it will take time to make
management skills will be able to earn more than you by
money, but it will simultaneously decrease the chances
frequent trading and exposing less and by following a
of losing as well,
better trading strategy.
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C. Getting a Feel for it- A balance is required to Your main goal is not a single trade, rather it These are some of the reasons responsible for the downfall of
both manage your trade by doing proper focuses on the strategy involved in it which will traders.
evaluation along with doing proper research on the give you the maximum success rate. If you are in
risk tackling strategy. Trading is not about a gut trading for gaining 30$ then you have the equal For example- if you have 70% success rate with 10 trades then on
feeling rather than actually doing it on a proper chances of losing it and each dollar you prevent the basis of statistics total missing trades will be 3 and 7 with
basis with a proper way of handing the risk. Not from the loss you are summing it up in your profit money. Losing trades of 3 and winning trades of 3 are to be
only looking the higher perspective will help you out margin. cancelled out thus left with a profit margin of 4.
but also you have to consider the downside
This concept is all about enhancing your profit not Thus by doing intricate work of stopping losses, doing smaller
potential. It will make you a bit biased towards
focusing on your loss. trades, frequent trading, and maintaining the return/risk ratio.
making money without focusing much on the
potential risks involved. Trading is all about the mathematical calculation, the more you
E. Mathematical Approach-
calculate, the better you be with skills, chances will be more to
D. A Comprehensive Approach-
Forex market is all about mathematical tools make your trading work out, more the money you will make. Gut
Don't be much greedy to earn while entering the involved in their trading strategy. Mainly the instinct works for very rare traders who are intuitive enough to
trade, rather focus on the amount of risk you are return/risk ratio governs the whole scenario. This is calculate unknowingly.
exposing yourself to consider that an important line what profit means to Forex.
G. Studying the Luck Factor- Traders should consider this as an
for your trade.
Either you can increase the return by developing important factor though it's not related to gambling anyway and
For example if you have 1000$ and risking ability is your mental logical predicting skills of the market it's a very non biased opinion as well as trading is all about
about 3% , then 30$ stop loss you must have or you can mitigate the risk by considering the marketing skills and strategies. But you should have the far
created before entering the market and after losing ways given in the different sections. sightedness to follow the pattern so that you can avoid the future
this much you won't extend it. uncertainties which will lead to the bad luck anyhow.
F. How Does This Work?
Once trading is started it means your money is out A potential research has been done on this to study luck,
. Unable to manage stop losses probability and the chances of win or loss in the trade, thereby
in the market. Your prime motive should be
increasing the return which cost you 30$. decreasing the chances of bad luck.
. Taken bigger losses than profits
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CONCLUSION
Managing the risk is one of the most crucial
step to perform trading with a high chances of
maintaining the profit margin. The highly
qualified traders are those who have the
ability to expose themselves with the market
by maintaining strong marketing strategy
rather than having any kind of brilliant idea
which makes them different from all.

Your unique strategy, your fundamental skills

to cope up with the risk, your psychology will
make you different from others and will let you
be in the highly qualified trade horse races.
Some traders are highly skillful and their gut
instincts make them different from others.
There is no elixir to drink to let you be a great Luckily you have Forex to help you with, your unique skill will separate you from the other
trader rather than formulating the things and traders if you follow the things by keeping a great logical. It's not only about doing it for
do work according to the strategies you feel to once and gaining, it requires consistent efforts, and developing proper skills to mitigate risk
follow. will make you a successful trader.
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Contact details
United Kingdom Dubai

NFX Trading CO. Nextfx Technologies LLC.

27 Old Gloucester 2933, Prime Tower,Marasi Drive
Street,London WC1N 3AX- Street,Near Burj Khalifa, Business
United Kingdom BayPO Box - 7998 - Dubai - UAE

+44 2039116216 +971 4523 6264

[email protected] [email protected]

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