Understanding Risk Management In Trading - Part 2

2 Min Read
435 words

Hello everyone, hope you all are doing good? I'm back with the Part 2 of this amazing series, Understanding Risk Management In Trading. If you haven't read the Part 1, I strongly suggest you that by clicking here. In today's article we would be looking at Risk management in Trading, practically.


Photo by Executium on Unsplash

Risk management in trading, is a must learn skill for every trader who wants a sustained success in the trading world. Risk management is ability for traders to protect themselves from incurring losses. As a trader, you should first think of how to protect your funds instead of your profits you seek to make from a trade. As popular saying goes, A bird at hand, is better than the thousands in the forest

Not everyday is a win day. There are days when you lose and if, as a trader you don't have a proper risk management strategy, you can blow out, all the profits you have made over weeks, in just a day. That's why it is very necessary for traders to have a Risk management strategy.


For me, I have a pattern when trading and that's my risk management strategy. I have certain criteria for both my buy and sell trade entry and if those criteria are not met, I won't enter the market. Once they are met, I enter the market. Before entering the market I set Reward ratio to 1:2. I set my Stop Loss and Take Profit and then enter my trade. I normally use Break Retest Break(BRB) Strategy. Take a look at the image below to understand my strategy.


As you can see from the image above. I set my Stop Loss above the Support level and set Take Profit just some pips below my entry point.

Use A Moving Averages Trading Strategy

For the Moving Average trading strategy, I have a certain criteria for both my buy and sell trade entry and exit. I will wait for Golden cross, after the it, I will enter the trade. I will set my stop loss some below the Golden cross and use RR 1:2 to set my Take Profit. Take a look at the image below to understand my risk management strategy when using the MA trading strategy.



I hope you all found the article interesting and exciting. Do well to share your thoughts about the article in the comment section below. Thanks.



Thanks For Reading

Till Next Time, Stay Safe