Always use stop loss on every trade

As forex traders, we never think of placing, entering the trade without knowing where to place our Stop-Loss order, which protects us from greater risk in case the market wants to go against us.

You must plan your operations for the next few years. Trade is a business. It’s a marathon, not a sprint! Read below to find out how to calculate your risk as a forex trader.

Successful traders are only those who successfully manage their exposure to trading risk.

First of all, a forex trader wants to protect his money and then make a profit. In my opinion, managing risk is one of the key factors in growing your trading account.

Before you start thinking about how much money you can make trading forex, make sure you take the risk first. In our opinion, money management makes trading less stressful and also makes the difference between success and failure. That is why calculating the risk on each trade is crucial. We are using this Myfxbook calculator. It is very easy to use.

Example on how to calculate the size and risk of a forex position

Step 1: According to the rules of your trading margin, first determine how much you will risk in terms of pips. On the MetaTrader 4 trading platform, you can use the “Pip Meter” tool to measure the distance from your approx. Entry-level and stop-loss in terms of “Pips”.

NOTE: To use the “Pip Meter” tool, click, hold, and drag your PC’s mouse scroll button on your graph.

Suppose you are looking to buy EUR / USD and set your Stop Loss level at 70 pips from your entry.

2nd step: Use this Myfxbook calculator and choose / write your:

• Money account
• Account size
• Hazard ratio in%
• Stop Loss in pips
• Currency pair

To continue from our first step above, we can give you an example.

• Account currency: USD
• Account size: 10,000
• Hazard ratio in%: 2
• Stop Loss in pips: 70 (from step 1)
• Currency pair: EUR / USD

After clicking the “Calculate” button, you get the size and risk of your Forex position. Based on our example above, the risk for traders would be $ 200 per trade, and you can enter with no more than 0.286 lots (28571 currency pair units).

That’s it, it’s that simple!

As traders, we cannot control the randomness of trades. No matter what trading advantage or forex strategy we use, we never know if the trade will be a winner or a loser. All we can control is our business process in each and every one of the operations we carry out. When you trade the system, the rules are always the same for every trade you perform. The market is too big to predict and you can’t get every trade right.

Do not forget, please, the market rules and you will always be right! Worrying about ONE particular trade doesn’t make sense. We see an operation that belongs to a larger set of operations. When we accept a trade, we do not care if it is a winning or losing trade.

All we care about is following our business process. Then the odds do the rest.

Don’t forget: trading is a business of probabilities.