I'd have to say that EVERYTIME Bill Poulos is a guest blogger, he gets almost as many comments and attention as Adam...ALMOST. Today should be no different. I called Bill and asked him to write an article on risk management in Forex. I read the article and it delivers, so you won't be disappointed. This article focuses on the method he uses and he's produced two videos (Flexible Forex Discovery VIDEO ONE.....Flexible Forex in Action VIDEO TWO) so check out the videos, enjoy the article, and let the comments fly as I told him he'll have to teach in the comment section!
When trading anything, risk management is first and foremost. Without it you will lose, period. When trading the Forex markets or any highly leveraged market, you must have a risk management plan that accounts for that leverage.
Forex broker’s are fond of touting the fact that they provide 100:1 or even 400:1 leverage, but the truth is, if a trader ever takes on position sizes that take full or even partial advantage of that leverage, the account will soon be wiped out. That is because the maximum % of one’s account size that could be risked on each trade allowed by the broker, would lead to excessively large position sizes and levels of risk far beyond what a good risk management system would allow.