Risk Management In Forex Was Hard.. Till I Discovered This Easy 3-Step Secret (Beginner To Advanced)

"you only need to know three things in order to master Risk Management number one you need to understand your own risk tolerance number two you need to understand and Implement stop loss orders and number three you need to understand how to calculate your position size very quickly"

"risk tolerance is going to refer to the amount of money you are willing to risk on one specific trade"

"for me it's between one percent and three percent of my total account value again if I had a 10K account that would mean that for every trade I placed while my account was at ten thousand dollars I would be risking between 100 and 300"

"stop loss orders are extremely simple what we're doing with a stop loss let's say we have a buy trade and you bought in here at this blue line what you want to do at that point is pick a logical place in the market where you know you're wrong about a trade"

"you're going to want to choose to place a stop loss and you're either going to want to place that stop loss based on the amount of Pips which you can see whenever I hover over this red thing it says 72 Pips here so the amount of Pips would be 72 in this case or you can do it by price as you can see right here price I can do the stop loss as 0.8789"

"our risk tolerance whatever that number is you're willing to lose divided by our stop loss in Pips is going to equal our losses per pip"

"we have a 10K account and for easy math you want to risk one percent of that... one hundred dollars and let's say for this specific trade our stop loss is 25 Pips ... we have a 100 risk that's our risk tolerance divided by the amount of Pips in our stop loss which is what 25 that gives us four that means four dollars is our lpp"

"so with that being the case what you would do for a position size just by using the simple formula and having this table beside you you can figure this out in seconds the only thing you need to do is look over here lpp and figure out where can I get four dollars out of this well it's pretty easy to see that one mini lot times four will give you a four dollar risk per pip four dollar loss per pip in this table right so the only thing we would have to do is put a position size on this trade of 40 000 units or for mini lots"

"we have twelve thousand two hundred fifty two dollars in our account... I want to risk three percent of this... that gives us us 367.56 this is what this would be our RT... we now have a stop loss in Pips let's say of 32... we would just take our RT or risk tolerance of 367 dollars we would divide that by our stop loss in Pips which is 32 Pips and we need our risk per pip or our losses per pip to be around 11... I have an 11 lpp... with that being the case... you can do eleven mini lots or you can do one standard lot and One Mini lot what this means essentially is that our position size is going to be a hundred and ten thousand units"

"if this is just way too complicated for you you can go to I'll put the link on the screen there's a position size calculator that you can get on baby Pips and that will do all this math for you"