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Forex Risk Management – Whats your Risk % per trade?

Forex Risk Management

FOREX RISK MANAGEMENT

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Whats your risk % per trade?

Or should i say, what’s your risk appetite?

To be a successful forex trader. You will need to have a proper money management system.

It starts with identifying what level of risk % per trade will you risk.

As a guide, a safe and good risk percentage will be from 1% – 3%.

Anything higher than 3% will be relatively risky.

Why is this so.

If you understand, the forex market can do anything.

Even if you are sure this is the MOST perfect setup.

It MAY NOT end up the way you expected it to be.

Why?

 

Forex Risk Management – Whats your Risk % per trade?

Forex Risk Management

First, you must understand that anything can happen in the forex market.

Just for example, even if it is the most perfect setup. If a major institution pumps in a large sum of money at that period oftime. It can change the direction of the market for a short time frame.

And when the retail investors see the market moving in the direction stipulated by the major institution, they will then follow suit and enter the same way.

WHICH causes the movements in the market.

But of course, this doesn’t happen always.

What i’m saying is, anything can happen in the forex market.

So even if you are the best forex trader in the world. You will not have a 100% winning rate as well.

You will still lose as the market can do anything.

Which is why, it is not wise to have a high risk per trade.

Forex Risk Management – For example, if a trader risk 10% per trade.

And a series of unfortunate events happen to him, (maybe it’s a distraction, maybe there’s an earthquake etc)

As a result, he made a series of 5 losing trades.

He would have wipe of 50% +- of his trading capital because he risked 10% per trade.

And with just 50% left, it will be hard for him to make back his loss.

So if you see what i meant.

Forex Risk Management – For example, if you risk 2% per trade.

With a series of 5 losing trades. You would only lose 10%+- of your capital.

Which is not to bad.

With a good trading system, we can easily make back the money loss.

 

Forex Risk Management – Whats your Risk % per trade?

Forex Risk Management

But here comes the big question.

What is your risk appetite?

You see, there is absolutely no point into asking you to risk 1% per trade.

Forex Risk Management – Eg. Capital $5000

Risk of 1% = $50 per trade.

If at the back of your mind, you do feel that $50 per trade is too little.

Then you will most likely find and trade even more trades that you usually should – in order to make more money. Right?

Therefore, the correct way to set your risk % per trade varies with different individuals.

You must ask yourself.

Forex Risk Management – Eg. Will you be satisfied with

$50 per trade or

$100 per trade or

$150 per trade

based on the capital of $5000

Once you got an answer, you got your risk percentage.

 

Forex Risk Management – Whats your Risk % per trade?

Forex Risk Management

Remember,

1) Your risk percentage cannot be too high. As mention a good gauge is 1% – 3%.

2) Your risk percentage must meet your risk appetite. There is no point in risking 1% if you find the amount too little and does not satisfy your hunger.

So there you go.

Once you have set and decided on your risk % per trade.

STICK FIRMLY TO IT!

For example, in a series of trades. You cannot have eg. 1% on 5 trades, then 3% on 5 trades etc.

Because if you play it this way, and what if you make money on the 5 trades with 1% risked, and lose money on the 5 trades with 3% risked. (which usually happens!)

YOU WILL LOSE MONEY!

Therefore, stick firmly to the risk percentage per trade which you have set.

Eg. If you set 2% risk per trade.

From now on, every trade you take – You will risk 2% per trade.

NOTHING MORE, NOTHING LESS.

This way, you will be consistent and you are on the right track to success.

This is part 1 of the 2 series of Forex Risk Management.

Stay tuned for the 2nd part.

Check out our online forex trading AFM winning Forex Price Action Forex Course where i teach you the exact FULL Forex Trading Strategies | system that i personally use to be consistently profitable.

See you on the other side my friend,

Asia Forex Mentor

Ezekiel Chew

Asia #1 Forex Mentor

www.asiaforexmentor.com

 

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I really don't understand this thread. the title of this thread is. "what are the best forex trading hours?" So when I open this thread I assume that the topic is all about trading hours right? But inside is about forex risk management and has nothing to do with forex trading hours. Totally confuse with this one.

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I really don't understand this thread. the title of this thread is. "what are the best forex trading hours?" So when I open this thread I assume that the topic is all about trading hours right? But inside is about forex risk management and has nothing to do with forex trading hours. Totally confuse with this one.

 

Well in my view thread creator wants to talk about those hours when we get good chance to make profit, for me those hours when all major markets are open are best trading hours as we see good movement in prices and that is necessary if we want to make profit.

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Well in my view thread creator wants to talk about those hours when we get good chance to make profit, for me those hours when all major markets are open are best trading hours as we see good movement in prices and that is necessary if we want to make profit.

Have you read the creator of this thread? Can you quote the paragraph or even the sentence that talk about hours of major market open? Because theirs no paragraph or even a sentence that talk about the time table or what ever that related to time. So its shows that this thread title has nothing to do with its contains.

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l think the title and content is different,but it is still related to forex so no problem :)the risk managment is one of the most important knowledge that every trader must have.what l have discovered latley is it is exctly where the winners and loosers differs.risk managment gives a trader total control on his investment.

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Local time to business the forex marketplaces is between 8:00 GMT and 16:00 GMT. These are generally the time of the London, uk industry with the last 5 time being in overlap with the US industry. This is time when the most investors and greatest lenders are in the marketplaces making their investments. It is widely considered the most successful a chance to business.

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I really enjoy trading 24/5 right now. I hope I can make good income in here. I just feel that its worth it for me to trade in demo first but I'm so eager to trade in real account that after two months I trade in real account and now I have 6 active accounts. That's why for me as long the market is open its always best time to trade. theirs so many pairs to trade and to choose.

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the most active hours usually is during europe session and beginning of new york session. if traders search volatility, those time trading will be suitable for them. but for swing trader, usually their parameter is not an active hours, so all of trading time is good opportunity as far as their trading system said so.

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Yes this is true and real the forex market has its own trading session and I think that the right time to trade is for any trader to look into the forex pair which he wanted to trade and make sure that he trade and do more analysis on that pair through this means he will be able to know the right time to trade in the pair since all pair has their trading hours.

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  • 3 months later...

Once we have settled our proper risk management then, we can easily pick the time we have for trading. I just don't think we need to literally have exact time but to have at least range or session time. So, we can have the major market sessions which mostly prefer those who overlap and then, monitor the market movements in that time.

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well the best trading hours depend on one trading strategy and understanding of Forex market,i don't think one can set a time without understanding and having a trading plan that fit to the trading hour one might be thinking of trading.proper study into the market will help one understand and help one determine the best trading time

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well the best trading hours depend on one trading strategy and understanding of Forex market,i don't think one can set a time without understanding and having a trading plan that fit to the trading hour one might be thinking of trading.proper study into the market will help one understand and help one determine the best trading time

Yep, for scalper, maybe Asian Market is the best. Maybe others think that opening or closing market is the best time for get into the markets. Everything depend on each traders.

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