Lesson #68 Difference between the Low Percentage risk and High Percentage Risk

The following illustration would help you to find the difference between the risks that has low percentage of risk involved in investing your capital in forex:

There is huge difference between 2% risk and 10%risk on a particular trade. If you are facing a critical situation by losing 19 trades in a row then you need to start your trade from $ 20,000 in which you are ready to take the risk of $3,002 at the risk of 10% on a particular trade. By this time you might have lost almost 85% of amount from your trade. If you are planning to take the risk of 2% and invest about $13,903 in your trade then you might get ready to take the risk of 30% loss on the total amount of your trade.

If you have lost 5 trades then too the difference between 2 % to 10 % of trade would be high as compare to other trades. If you are ready to take the risk of 2% then your total investment would be of $18,447. Your risk is of 10 % then you would have $13,122 in your hand. This would be less then the loss that you have made in 19 trades at the risk of 2% only.

If you want to remain in the market for long time then you need to have the skills of money management. If you have made the loss of 85% then you could have make 566% of amount would be remaining in your account. If you want to avoid this situation then you need to know the basics of management. The following information would help you to minimize your risk:

If your loss is more then you would have difficulty in managing the size of your account. You should try your best to protect your account from loss that you have made in your account.

These are some ways that can help you to save your account from loss and you can avoid the draw backs of your account. You need to remember on thing that you are not a gambler.