Note

Risk Management Strategies

Verified Official
· Views 284

You can never eliminate risk completely when trading indices, however, you can reduce it by focusing on risk management.

Four strategies that can help reduce risk include:

  • Determining your optimal position size

Before you start trading indices, you should determine your optimal position size for each trade.

A good rule of thumb is to avoid risking more than 2% of your capital on any single trade. Trading more than 2% per trade could expose you to losses that are hard to recover from.

  • Putting stop losses in place

Stop losses are a fundamental component of a robust risk management strategy.

Stop losses help minimise trading losses by closing out losing positions before large losses build up.

  • Using leverage sensibly

Leverage can magnify your trading losses so it should always be used sensibly.

  • Keeping an eye on the economic calendar

An economic calendar can be an invaluable risk management tool as it will list events that could potentially impact stock indices.

By keeping a close eye on economic releases related to the index you are trading, you can anticipate price moves in advance.

Reprinted from eTorothe copyright all reserved by the original author.

Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.

FOLLOWME Trading Community Website: https://www.followme.com

If you like, reward to support.
avatar

Hot

😔

-THE END-