There are more than a few things which come into the picture when it comes to trading in foreign exchange. Risks are part and parcel of foreign exchange trading. Considering every single variable which comes into trading in this market and making proper forecasts is where profits lie. You have to invest as per market movements. Without a doubt, handsome profits come when Forex risk level is high. If you’re that trader looking for some serious trading and profits from this market, well, just read on!
3 ways to get Profits from High Forex Risk Level Trades:
1. Balancing High Leverage:
You should know already that leverage can hit back at you. Either they’re going to give you quite a high and handsome stash of profits, or it’s going to be a just as hurtful loss. There is nothing better than making sure that there’s going to be profits from this market. So, you have to balance high leverage with some form of a contingency setup.
This is where an additional risk management setup can come in handy. Risk management setups are simply inbuilt integrations on you trading account which stop you from entering into trades where your losses can outweigh your overall margin.
Choosing leverage can be daunting. Especially, if you consider the high profit is winning probability it has. But always avoid going for preposterously high leverages – 1:500. These can deteriorate your overall investments the moment you encounter a loss and that you will at the point of time or another.
Opting for high leverages is never what experts suggest. Rather, going for 1:100 or 1:250 still are acceptable to a certain degree. Provided you follow correct money and risk management methods and strategies.
2. Money and Risk Management:
Consider that you’re investing a particular sum in EUR USD. AS per your charts, you believe interest rates in the European market will rise. Now, as an investor, making use of your money properly is what you would seek.
As per the conventional trading norms, you have to keep an eye on your risks and the sum your down pouring. To keep your risks at bay, go for not more than 1.5% to 2% risk allowance and your investment to be not more than 10% of your total equity. (This is for one trade.)
3. Strategically going for High Risk/Reward Long Trades:
Though opting for short trades is what most new traders go for, long trades are where the profits lie when it comes to foreign exchange. Long trades will come with high Forex trading risk level. But so are the probable profits.
There are good reasons for this. When looking at long time frame charts, the possible trading prospects are clearer. Reasons being, firstly, market trends persist in long term trades, i.e. they rarely take unprecedented turns. So you know what you’re getting into. Secondly, you can set your TPs a bit higher, as per proper in-depth technical analysis which is a must, and then just go for it!
The thing is, Forex risk level and profits go hand-in-hand. This is a highly variable financial market. But, either way, if you do get your analysis and forecasts right, the profits will be above your expectations. These tips and suggestions are just a few ways to be one the safe side of things.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.