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RISK MANAGEMENT by Andrew Marshall Risky Business Risk management, from theory through real trade examples


FX


What is the single biggest factor to determine a trader/investor’s lifespan within the markets?


A lot of you probably say access to capital, and you’re right... kind of. Without capital, we can’t gain that exposure that we love so dearly. But with exposure, comes risk. We all know, thanks to the constant reminder from the CFTC, that the amount of risk is directly related to the amount of reward. Leveraged instruments,


such as the foreign exchange market, are inherently higher in risk and, thus, offer the potential for greater reward.


Tis risk:reward relation is a two edged sword, however, and most FX traders only see the potential for large gains and never consider


the


increased chance of blowing their account. While a new trader will study different strategies for hours and hours only to place a too-large long position just before an unexpected economic


release, experienced traders will close any under-developed positions and await the results of the release so that they live to trade another day. I’ve been trading accounts within the forex and currency futures (not binary) markets for the better half of a decade now, and, with two words, I can describe the difference between an experienced trader and an amateur: Risk Management.


If you’re an “old-head” looking for FX TRADER MAGAZINE October - December 2017 55


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