FOREX : never risk mone y that you can’t afford to loss

Some basics to know about FOREX

probably
won’t
surprise
you
when
we
say
that
with
greater
opportunity
for


profit
comes
greater
risk

Having
said
all
that, 
it
is
important
to
remember
that
as
profitable
as
the
Forex


market
is, 
it
still
carries
all
the
risks
involved
with
financial
trading.
You
should
always
be
aware
of
the
risk, 
and
never
risk
money
that
you
can’t
afford
to
loss

Remember, 
Leverage
can
be
a
trader’s
best
friend
when
used
carefully, 


and
his
worst
enemy
when
used
recklessly.
It
is
a
great
tool
for
increasing


Profits, 
in
fact
private
traders
rarely
trade
without
it, 
but
you
should


always
keep
in
mind
that
the
higher
the
leverage
is
–
the
higher
the
risk level
involved.


Here
is
a
to‐do
list
of
actions
to
be
taken
as
you
open
a
trade:



‐
Identify
the
pair
to
buy/sell


‐
Decide
on
the
initial
investment
amount


‐
Choose
the
appropriate
leverage


‐
Consider
applying
trade
limits
(covered
in
the
next
chapter)


‐
Open
trade



Let’s
say
that
after
spending
some
quality
time
on
gazing
at
the
charts
of
several
currencies, 
you’ve
concluded
that:





1)  The
EUR
is
trending
up


2)  The
USD
is
trending
down



Now,
what
is
the
reasonable
decision
based
on
this
conclusion?



Clearly
you
can
profit
by
first
selling
USD
and
buying
EUR,
and
then
buying


cheaper
USD
and
sell
expensive
EUR.



We
could
do
this
by
buying
and
then
selling
the
EUR/USD
currency
pair.


A
reminder
‐
buying
is
done
at
'Ask'
price,
while
selling
is
done
at
the
“Bid”
price.

Remember,
Stop
Loss
and
Take
Profit
orders
are
very
simple
tools
that
can


make
the
difference
between
a
successful
trading
career
and
a
big
hole
in


your
pocket.
Consider
using
these
orders
with
every
trade
that
you
make.