Chapter 3 The Importance of Controlling Risk
In the trenches of Forex trading, controlling risk is more important than your entry signals or your exits. It’s more important than any trading strategy or system. It’s the key to long-term success in trading.
Consider the case of Jane, a seasoned Forex trader. Despite having a solid trading strategy and a good understanding of the market, Jane finds herself on a losing streak. Instead of panicking or trying to recoup her losses with high-risk trades, Jane decides to cut her risk. She halves her risk after each loss, ensuring that she’s not exposing too much of her equity to risk at any given time. Thanks to her risk management strategy, Jane is able to weather the storm and stay in the game.
