This article looks at the forex training that teaches you about predicting your losses.
Before you trade on the forex market you need to look at forex training. The forex training that you complete will help you understand all the aspects of the market that you have to know about. When you know about these aspects you will be able to trade on the market with greater success than if you did not go through training. One aspect of the market that your forex training should prepare you for is the prediction of losses.
Losses on the Forex Market
When you trade on the forex market you are going to be faced with losses. The losses that you have will vary in size depending on the controls that you have. If you do not control the impact of the losses then you are going to face margin calls and account depletion. Losses are something that all traders are going to have. Even the most successful forex traders will have losses at some point.
It is important that your forex training not only tell you about the losses that you can face, but also how to predict them. This should be done at the same time as how to predict your forex trading profits. Being able to determine the profits and the losses is the only way that you will be able to trade successfully on the forex market.
Control the Losses
When you predict the forex losses that you can make you are going to be looking at the profits you can make. When you make a profit on the market you can also be making a loss. However, there is something that you can do with loss predicting that you cannot do with profit prediction. This is the controlling of the losses that you are going to make.
When you predict the losses that you could be making you can put a stop at where the loss will be. This means that you can set the loss that you make and not have to worry about the predicted loss. To do this you will need to consider the maximum amount of your trading account balance that you are willing to lose on a single trade. When you have this amount you are able to predict the exact amount of loss that you are going to make on any trade.
The Maximum Loss per Trade
When you look at the maximum amount of loss per trade you will also be looking at the maximum risk per trade. This is actually the same thing and just comes with a number of different names. Most traders will set this amount to 2% of the trading account balance. To ensure that this is the only amount that you are losing you will have to place your stop loss orders accordingly.
When you place the stop loss orders you are going to have to determine what 2% of your trading account balance is. You then have to determine the price where you could lose this amount on the trade that you are setting. This price is where you should be placing your stop loss order. Of course, you can set the order at a tighter price if you want to.