1. Know when to stop.
First of all, start with the most challenging foreign exchange risk management practice-knowing when to go out.
If you haven't traded with real money before, you won't understand why it is so difficult, but you will understand why after experiencing the risks of real money.
In foreign exchange transactions, it is always possible for currency pairs to change direction, even though this possibility may be infinitely small. Don't deceive yourself that it will happen, because when traders foolishly expand their stop loss, they will think, "I just give it more space …", but almost every time, the loss will increase.
Good foreign exchange risk management practices will prevent you from falling into this trap. Set a reasonable stop loss, stick to logical thinking, don't let yourself be controlled by emotions, and control the risk of each transaction, and your profit will increase.
2. Adjust the position size
Another basic rule of foreign exchange risk management is to control the size of positions. For example, if you have10,000 USD in your trading account, don't put all10,000 USD in one transaction. Dividing your funds into different positions is not necessarily even: you can put more money into lower-risk transactions and less money into higher-risk transactions. This is a good strategy for beginners.
Obviously, if you divide the funds into a small part, you will not only gain a lot when you make a profit, but also face small market fluctuations that exceed the stop loss before trading. Therefore, when changing positions, we should be rational and cautious.
3. Stick to logical thinking
It is relatively simple to calculate the gain or loss caused by each fluctuation of 1 point, but there is no need to let these terms bind your thinking (which often makes traders feel anxious). Determine the ideal starting point (within a reasonable range) before trading, and then consider what strategy to adopt to reach the starting point. When you found that the policy didn't work, how did you judge it failed?
Suppose you make more dollars/pound, you can see that the currency pair hit the resistance level at 1. 10, and then fell to 1. 10 and hit the resistance level again. How many times will this happen before you close the transaction? Make a decision and click close the transaction, no matter how bad you feel.
Try hedging
Hedging, in short, is to conduct two transactions at the same time, so that if one loses, the other can make up for the loss.
Most brokers are not allowed to hedge directly. Direct hedging is simple and effective: you trade GBP/USD at the same time as USD/GBP, and then quickly close the losses.