This article looks at the risk management you need for your forex Singapore trading.

When you trade on the forex Singapore market you need to know about risk management.  There are a number of points that you have to look at when you consider the risk management that you need to complete.  The points that you have to consider are the strategy that you are using, the risk calculations that you complete, the market liquidity and the risk per trade that you are taking.  All of these factors will make up part of your risk management.  There are some traders who include other aspects of trading to their risk management.

The Strategy You Are Using

The strategy that you use will have an impact on your risk management.  There are many different forex Singapore strategies that you can use with varying degrees of risk to them.  When you have a high risk strategy you have to consider how this impacts your overall trading.  This will be done in relation to your risk capacity.

Your risk capacity is made up for your risk tolerance and the capital that you have.  The higher your risk capacity the higher the risks you are able to comfortably take.  If you have a low risk capacity then you should be using a strategy that complements this.

The Risk Calculations for the Forex Singapore Market

There are a number of different calculations that you have to complete when you trade forex.  One of the calculations that you have to consider is the risk and reward calculation.  This needs to be completed before every trade that you complete.  When you use this calculation you will be able to determine whether the risks associated with the trade are worth the return that you could be making.

There are many trades that you assume will be worth the risk.  However, when you complete this calculation you will find that they are not.  You should never open a trade that does not have a good risk to reward ratio.  When you do this you are more likely to make a loss with the trade than a profit.

The Market Liquidity

The market liquidity is a major risk factor that you have to consider when you look at trading forex.  While the forex market is the most liquid financial trading market this does not mean that it is liquid all the time.  There are times when the liquidity of a currency pair will be low.

When the liquidity of the currency pair is low the price action will be unpredictable.  This means that the price could move in ways that you do not expect and this will lead to losses.

The Risk Per Trade

The risk per trade is the part of risk management that most traders will know about.  This is the maximum amount of your trading account that you are willing to lose on a single trade.  Expert traders state that this should never be more than 2% of your trading account balance.  There are others traders who feel that this should be set at a lower percentage.  The amount you are willing to risk per trade is up to you, but you should consider the advice that you get from expert traders.