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Forex Trading-The Risk Management Theory for beginners

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Reason behind the FOREX market 

The need to exchange the currency is the main reason behind the large FOREX market or the liquid market across the globe. It dwarfs the other bazaar in size, even the stock market with the change in average trade value per day.

One unique aspect of FOREX market is there in no central marketplace for exchange. Rather currency trading is conducted via electronic medium over the counter. Means all the transactions occur via the network among the traders globally rather than from the centralized exchange.

The market is open 24-hour a day that means when the trading stops in US, the FOREX market begins in Tokyo and the Hong Kong. In essence, the FOREX exchange market is extremely active 24-hours day and night and price quotes varying constantly. 

Nassim Nicholas Taleb’s specialty in Trading

His career in FOREX Trading brought him the great wins with allegedly little to talk in between. His approach is a little opposite of other retail traders in the market. Taleb buys out- of-money option with the underlying potential to make a fortune. His trading approach is focusing on risks for the prolonged success, minimal trading risks is the first step towards the profits. He has been the quantities dealer and investor in the market for two decades.

Risk management in Trading by Taleb

  • Seek to avoid the markets and products which are not understood by you.  You will get yourself fooled.
  • The large hit taken by the trader will not resemble with the previously taken. Try to avoid the agreement, which shows where the risks may happen. You will be hurt less with least expectation.
  • Believe in your reading skills, not in hearing skills. Do not believe in any theory in front of your thinking and observation.
  • Stay alert with the non-market marketing traders who actually make a stable income or profit. They usually tend to explod
  • Traders with recurrent losses may hurt the investor. Long instability traders drop money most days of the week.
  • The tendency of the market is to hurt the hedgers; however, the best hedger is the one who alone put on.
  • Always do the research for the change in prices of all the trading mechanisms. You will develop a quality to build the instinctive inference, which is powerful than the conventional statistics.
  • The greatest involving mistake in trading is the event those never happen the market before. However, the event that never happens may happen in another market. The fact is who did not die till date will not become an immortal.
  • Read every experiences and book by the traders to know where they lost money. However, you will never get any relevant data about their profits. Everybody learns from the losses.

 

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