Risk management is a process of recognizing, evaluating, and controlling all the threats of organization and capital earnings. Risk can be from different sources, for instance, legal liabilities, financial uncertainty, strategic management errors, and natural disasters. Digital trading platforms also prefer to take into account risk management.
Forex and Contracts For Difference (CFD) use leverage which can increase your profit or loss. And, as you know, the higher the potential profit, the higher the risk. Royal Bitex uses risk management to reduce trading risks.
Forex and leverage money loss risk
Forex risk management uses numerous tools that can help you reduce trading losses
and receive high profit. Forex risk management is based on four significant steps:
- Search for possible risks
- Analysis and evaluation of the risk
- Finding solutions to reduce the risk
- Management and application of the solutions to improve the trading system
Another way is to use a leverage effect which offers reduced margin requirement. Here you have the same jeopardy. You can lose your investments. However, Royal Bitex risk management system helps to forecast it and save your money. We also offer you to carefully select your leverage according to your account volume.
Inaccurate market evaluation
Forex and CFD trading directly depend on market sequence. Sometimes the difference between the bid and ask price varies and your market assessment can contain mistakes. The market is constantly affected by the news, trends, opinions, and political situations. To prevent defects, Royal Bitex uses inbuilt tools that help to evaluate the market as accurate as it’s possible.
They usually include significant leaps in price. Despite market gaps that allow companies to receive more customers by increasing awareness
and creating targeted offers or advertising campaigns, they also bring big gaps in traders pockets. To prevent failure, track your profit.
Quotes can change rapidly, especially when the market is unstable. To prevent unpleasant cash loss, traders place stop-loss order. It reacts faster than a regular human. Stop-loss is one of the most important risk management tools. With Royal Bitex account you can create a unique stop-loss and protect your trading profit.
There are no general rules for the stop-loss limit (they are setting individually). However, we offer you using our demo account to see how it will work. Here you can test numerous stop limits in different scenarios.
No matter how hard you’ve been working to achieve your goal, remember to consider external factors that can change your success position. External events can’t be controlled or forecasted. That is why it’s hard to reduce the associated risk. There are three types of external factors: economic risk (includes changes in market conditions), natural risk (includes natural disasters, such as power outages, falling internet connection, fatigue, etc.), political risk (associated with changes in the political environment or governmental policy).
Know your limits! Sometimes, even the best traders don’t achieve profitable trades. Good quota of Forex can reach 10 profitable trades. Order size tool helps to calculate your commission size with sufficient trade capital for market movement outlast.
Choosing leverage tools helps you to calculate risk level because sometimes too high leverage can increase your risk in your overall trading result. Use the choosing leverage tool to experiment with different trading scenarios. We are sure, they will help you select the right direction for your trades.