We all know that risk management is very essential when we trade in Forex that entails a high level of risk.
let me ask you a simple question. How many of us are actually applying money management when we trade. Please chose any one of the five options below
1.I dont use risk management as it is not necessary.
2. Yes I use risk management and risk only 2% of my capital in trading.
3. Yes I use risk management and risk only 4% of my capital in trading.
4. Yes I use risk management and risk only 5% of my capital in trading.
5. Yes I use risk management and risk only 10% of my capital in trading.
6. I use risk management but the options mentioned above are not rational as risk management relates to my own risking ability.
Please chose one option before continuing reading. Obviously first option I do not think anyone might have chosen. But how many of you have chosen an option from 2 to 5. I am sorry for you all but you do not understand what risk management is and for using it you need more learning.
For those who chose the 6th option they are actually correct. Not agree with me continue reading. Forex is a leveraged trading platform and what the need is there for me to deposit a large amount of money when I risk only 2 or10 % of my capital. For example if I want to risk only a 1000 $ then what on earth is there a need for me to deposit 25000 $ in my trading account. Risk management has nothing to do with the senseless percentage rules. It insists on risking the amount of money in trading which you can afford to lose.
Please express your views regarding my thoughts above.