RISK MANAGEMENT ~ forex trading oanda review
Before you make a trade, the trader must ask himself the following questions:What the extent of market movement is and when is it the right time to make a profit?
A trader can use an order to take profit and close the position when the market reaches its profit target. So, if you hold a short position on the market, you can place a Take Profit just below the current market price because this is its area of ??profitability.
On the other hand, if you are in possession of a long market position, you should use a Take Profit above the market price. With the use of the Take Profit, a trader is able to take a more disciplined and systematic trading position. In this way you can still benefit from the price changes even if you are not constantly monitoring the market.
What is the extent of losses that a trader is willing to support before closing a market position?
With a Stop Loss order, traders can specify a closing point to a market position at a loss. If you take a short market position for a currency pair, then you should place a stop loss order at a price above the current market price. In contrast, if you open a long market position, then the Stop Loss order should be placed below the current market price.
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