The risk controllability of foreign exchange is actually much higher than that of other commodities. However, because we use the mode of margin trading, it is quite important in risk control, and it is more cautious than other financial products.
The risk of speculating foreign exchange mainly comes from two aspects: one is the risk of capital planning, and the other is the risk of trading mentality.
The nature of foreign exchange margin trading lies in this small profit, and because of this trait, investors often overlook the risks while pursuing profit while being too hot.
Generally speaking, the minimum margin required by traders is mostly between 3% and 5%. What we want to emphasize here is that “the lowest” does not mean that we have the “lowest” margin for each transaction. In terms of 5% margin, that is, there is a credit transaction amount that is 20 times the operating principal, and the fluctuation range is also increased by 20 times. In the case of fluctuations of 1% on the day, the margin is 5%. Operation, its profit and loss ratio will become 20%.
Therefore, when we conduct foreign exchange margin trading, we should first formulate a trading strategy and determine the margin ratio of the operation. The decision on the margin ratio comes from our confidence in the market judgment and the risk we can bear. Rather than planning without trading, when the market starts to fluctuate, do speculative speculation, which will only make us more likely to get lost in the market, and not be able to extricate ourselves.
The risk that foreign exchange margin needs to pay more attention to is the trading mentality. There are many good analysts in the foreign exchange market, but there are very few good traders. The reason is the trading mentality. A good investor must first It can eliminate the trading mentality of “I don’t dare to do it, I don’t dare to see it, I have been doing it wrong, I have been doing it wrong”.
When developing a trading strategy, it must be able to execute it. Only if the trading strategy is implemented is the only way to make a profit forever. Investors often fail to achieve the profit they expected when the transaction is correct. The goal is to play first; and when the transaction is wrong, it does not actually execute its own scheduled stop loss. In this way, all the gains made when making a profit are small profits. Once a loss occurs, it is often difficult to make up for it.