One of the things traders must do before conducting foreign exchange transactions is to conduct risk assessment. Only after assessing the trading risks, can we consider how to trade and how to open trading positions. Before traders consider the profit potential of a transaction, they should also consider how high its potential risk is. If a trader considers the risk first, it means that he puts the order of fund management before the trading decision, which can greatly reduce the later trading risk.
At the same time, traders should keep in mind that they should never accept unnecessary risks at any time, let alone participate in trading situations where they cannot control the risk range. For example, if a certain important data is about to be released, the market will fluctuate sharply, and there may be a gap trend. Then it is obvious that the risks are beyond the control of traders. This is a typical situation during the period of non-agricultural data, which is usually not suitable for trading. If a trader cannot control the risk range, he should not trade. It is also a good choice to leave the market and wait and see.
Next, let’s talk about the fund management parameters. Regardless of how much money a trader has for trading, he must not put all his money into the market to make orders. The wise choice is to allocate these funds appropriately and only use half of the transaction ratio to conduct transactions. The foreign exchange market is cruel, but if the trader’s actual risk-bearing trading capital does not exceed 50%, then it can be guaranteed that it will not be eliminated. Even if you encounter consecutive losses, all the funds for placing orders are lost, leaving half of the capital to trade, there is still the possibility of a comeback.
Here I will introduce a common method of fund management in the foreign exchange market: fixed percentage fund management. That is to say, the risk capital and total capital that each foreign exchange exchange can bear is set as a certain fixed percentage. In this way, traders can know at a glance how much risk each transaction can take. In fixed percentage fund management, as the funds in the trader’s account increase, the risks that can be assumed also increase.
How to do risk assessment and fund management in foreign exchange transactions?
Investors can only consider whether to trade and how to open trading positions after assessing the trading risks. How to conduct risk assessment? In some foreign exchange trading day software, there will be risk intelligent assessment, which is based on big data analysis and assessment of the customer’s risk tolerance, so that the risk can be controlled. After understanding the risk assessment, you can then calculate the amount of funds you want to allocate to each investment, that is, the way of fund management.
Fund management method
In some balanced investment portfolios, there is a pyramid, which is a risk pyramid, that is, products with lower risks are at the bottom of the tower. Of course, it is also the one with the largest distribution of funds. Then the following analogy is in order. I believe Everyone can master it well.
When the fund management parameters are set, you cannot put all the funds into the market to make orders, and allocate the funds appropriately. Use half of the transaction ratio to trade, so that you can guarantee the continuity of the funds and also have a turnaround. Possible.
In addition to the above distribution methods, there is also a method of fund management, that is, fixed percentage capital management, which means that the risk capital and total capital that each foreign exchange exchange can bear is set to a certain fixed percentage. In this case, investors You can know how much risk each transaction can take. In fixed percentage capital management, as the funds in the transaction account increase, the risk it bears will also increase.