• eur/usd 1.1862

    0.18

    BTC/usd 15.674.99

    8.60

    ETH/usd 674.99

    13.60

  • eur/usd 1.1862

    0.18

    BTC/usd 15.674.99

    8.60

    ETH/usd 674.99

    13.60

  • eur/usd 1.1862

    3.95

    BTC/usd 15.674.99

    4.78

    ETH/usd 674.99

    11.37

Risk Management Strategies You Can Use In Trading

Risk and management strategies on black board

Risk and its management strategies

What is risk management strategy

A risk management strategy is a structured approach to addressing risks, and can be used in any circumstance where there is a possibility of a loss and it can be used across any industry. Risk management is best understood not as a series of steps, but as a cyclical process in which new and ongoing risks are continually identified, assessed, managed, and monitored. This provides a way to update and review assessments as new developments occur and then to take steps to protect the organization, people, and assets.

 Avoiding Risk

Avoidance is an option that works to remove the chance of a risk becoming a reality or posing a threat altogether. If a trade is not moving well but is not presenting  any potential risk then avoiding the risk may be the best option. For instance if you enter a trade USDCAD then the trade starts misbehaving you can exit the trade before its in a loss. Avoidance should not be used so often because where there is risk there is reward also.

 Accepting Risk

Sometimes avoidance isn’t an appropriate response, and acceptance may be the best strategy. When a loss or risk is unlikely to occur or if the impact is minimal, then accepting the risk might be the best response. When you enter a trade and the setup is up to the point, the trend is inline with your predicted movement and there are multiple confirmations then accept the loss and hope for a win win situation.

 Mitigating Risks

Mitigating risks is the most commonly discussed risk response — however, it isn’t always practical or possible. It may be the best option if a risk poses a real threat or problem, and avoidance or acceptance won’t suffice. If a trade that you entered is gives negative impact and was costly to your account balance then that risk should be mitigated. This means identifying the risk, assessing all possible solutions, devising a plan, taking action, and monitoring the results in short this is recovering trading.

 Transferring Risks

There will be times when you as a trader can not , accept mitigate or avoid risk. One example may be a lack of expertise or training required to execute trades professionally. In this case, it may be a good idea to outsource or transfer the risk to another party. Somebody else can trade for you in an account management clause basing on your agreements.

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