Is there such a thing as risk free in forex trading? You might think that it is simply impossible to avoid risk in the forex market or other financial markets. But there are way you can employ to reduce and limit risks associated with trading in this market. This is where the idea of risk free in forex comes in.
The different methods that you can employ to help achieve a state where you are closer and closer to being risk free in forex are also going to be the topic of our discussion in this article, including how to set a loss limit, different types of loss limits, stop loss, take profit, and similar orders that can immensely manage and control risk in the forex market.
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What Is Risk Free Forex Trading? Is It Possible?
So the main question to be asked here is whether being risk-free in the forex market is possible or not. The thing about the concept of risk that you need to know is that risk goes hand in hand with every single financial market and every single financial move in the world. You basically cannot make a financial move where the risk is literally 0%.
However, there are steps you can take to become virtually risk free and bring your risk level so close to 0% that it becomes legible altogether. But achieving that state is not an easy task. It requires a lot of precision on the part of the trader and a whole lot of techniques to be employed. As we promised, in the coming sections we will begin by introducing the concept of loss limit and you can employ techniques related to loss limit and then we will also introduce some actual forex orders and methods that can help you minimize the risk that is associated with trading in the forex market.
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How to Use Loss Limits in the Forex Market?
As the name suggests, loss limit can refer to an array of techniques and strategies that can be employed by forex traders to limit any possible loss.
The major types of loss limit strategies are the ones you could set for your trades and overall for your trading capital. For instance there is a general rule of thumb for a loss of about 2% per trade. This means you can establish a system for yourself whereby you only tolerate a loss of 2% for every single trade that you want to execute in the market. Any more than that and it is the end for that particular trade and the position is closed. You can enforce this rule with the help of many different methods and techniques which we will discuss shortly.
On the other hand, you can establish loss limits for the entirety of your trading capital. For instance you can put a cap on the total amount of loss that you are willing to take for your trading capital. This can, for instance, be 5% of your total assets or 10% if you choose to be a bit more adventurous in the market!
You can also establish these loss limits based on time periods. For instance, a loss limit of only 5% per month. This would mean that in any given month, your total losses should never exceed 5%.
With the help of these constraints you can make sure that the total amount of loss that you would sustain is fully limited to its lowest degree.
Of course all of the processes for the loss limit that we just discussed can be executed manually with the help of methods discussed in the next part. But they can also be fully automated with the help of amazing forex trading tools such as XauBot Pro which is also discussed in the following sections.
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Other Orders and Techniques for Risk Management
Up to this point in the article we discussed the notion of remaining risk free in the forex market especially with the help of measures related to loss limit. But let’s talk about some actual steps and methods that you can take in order to limit losses in every single position:
- Stop loss: this is one of the most helpful orders that can be used to limit losses. As this order goes, you can set a threshold or limit for the percentage of loss you want your position to take. If the loss goes beyond the threshold that you have defined, then the position is closed automatically.
- Take profit: another useful order is the take profit order. With the help of this order you can define a threshold not for loss but for profit. In this way when your position hits a certain profit target then the position is closed. This help your position not to wander off too far in the market and lose the profits that have been earned.
- Trailing stop loss: a trading stop loss is just the dynamic version of a stop loss order. According to this order you can define a threshold for loss that is not static but dynamic. It means your stop loss order will move as the prices move and change.
There are many other methods and techniques for limiting loss, but none can compare with XauBot Pro. But how can XauBot Pro help you become risk free in forex?
Execute Risk-Free Trades with XauBot Pro
Perhaps the best way to achieve a state of being risk free is to use an automated solution. And the best automated trading tool for every single forex trading pair is XauBot Pro.
XauBot Pro is well-known for its amazing and high precision risk management tools and features. The following is but a handful of these features:
- Risk-free for scalp: in this parameter you can define a profit threshold in terms of number of pips for your scalp position. Once your position hits that goal then the position is closed to lock in the profits.
- Risk-free After (Pips): this parameter will allow you to define the number of pips for the distance at which your order becomes risk free in the market.
- Loss limits: there are many features for limiting loss in XauBot Pro, such as daily and even hourly stop losses
- Maximum Drawdown: as the name suggests, this feature will allow you to define a maximum percentage of loss you are willing to sustain for the entirety of your assets.
There are so many other features and tools in XauBot Pro that will help forex traders experience the true concept of risk free.
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Conclusion
Becoming risk free can become a real possibility in different markets and of course the forex market. The way to achieve that is to implement various risk management and loss limiting techniques. In this article we discussed how you can become risk free in forex.
