Always keep in mind that some unexpected event like a natural disaster, war or sudden death of a political leader could throw the entire market into confusion. Or what if your telephone lines go down and your Internet connection is lost?

Risk control is critical for successful fx trading. You can succeed without being the ideal technical researcher but you cannot make cash with worldwide foreign exchange trading without understanding risk management. All systems have their swings and roundabouts and if your risk is too high, your account balance may not be able to get over the downs.

On the other hand, if your leverage is too low, you won’t make much money even from a profitable system. It is dependent on drawdown and average profit or loss per trade, but a good rule of thumb is to risk between 1% and 5% of your funds on each trade. Only take the higher figure if losing your whole balance wouldn’t be a disaster. Typically, the more cash a trader has in their account, the more careful they are with it. Some traders consider that having a set risk per trade is too inflexible and the danger should depend on the strength of a signal. That’s fine so long as the variable risk is still outlined according to the system.