Trading Risk Management
There are 5 kinds of trading risk management that can be used, can we use one
or it all depends on the willingness and ability of a hazard that will be borne
1. Stop Loss / Stop Loss Order
This technique is the easiest technique in which the risk that we take only limited
how many points we have already set (eg 30 or 50 points from the price we get).
To use the techniques we give a stop loss stop order below the price when we
buy (buy order) or above the price when we sell (sell order).
Example: If we Buy USD / Yen 117.00 we put a stop loss / stop sell order at 116.50
So when the price falls to 116.50 we only lose 50 points.
2. Limit Order
This technique is a technique of orders booked in the position we set the price themselves.
The price we set to enter buy or sell a position, so if the price is
not achieved then we will not experience losses and costs. Limit order
valid until the closing time New York Market (Good Till New York), the closing market
Friday (Good Till Friday), or until the limit is canceled (Good Till Cancel).
Example: We set up limit orders buy USD / yen at 116.00
Then the price just went down to 116.50 and then back up to 117.00, so the limit order
tesebut not get that then we can order it canceled.
3. Hedging / Locking
This technique is a technique that many traders use, but this technique should be used
with mature calculations. This technique is the risk because we have to
analyze when we opened the hedging / locking position. We will also be charged
a commission charge fees and interest swap 2 times, so we have sufficient funds to
pay the fee. This technique is used trader who did not want to lose at all.
Example: If we Buy USD / Yen 117.00 and Sell USD / yen at 116.90
we open position 117.00 buy if the price rises above 117.10 and 116.90 sell open positions
if the price falls below 116.80.
4. Switching / Turn Over
Technique is a technique to change the position, where if we make the position of our
discard / liquidate our position and replace with new position
Example: If we Buy USD / Yen 117.00 then the price down to 116.80
We buy them to liquidate positions, then take a new sell position at 116.80.
This technique is a collection technique position, where we add the same position in the price
different. This technique is a technique that requires large capital, but the potential benefits
Example: If we Buy USD / Yen 117.00 then the price drops at 116.50
we then buy again diharga 116.50, and if prices come down again to 116.00 we buy again
diharga it, then release it all in the position if the price rises to 117.50.
RISK MANAGEMENT FREQUENTLY USED
Cut Loss. An action in which we conduct the liquidation of positions in a state of loss. This is done to avoid greater losses. This loss is generally cut in the range of damage done part ¬ 30 points to 50 points.
Open buy GBP / USD 1.8850, 1 lot. It turned out that the price move turun.Untuk avoid larger losses, when the price of GBP / USD reaches GPB/USD1, 8820 we immediately liquidate these positions (close sell) with a loss 30 points (GBP/USD1, 8850 - GPB/USD1, 8820)
Switching. Actions in which we conduct the liquidation of the po ¬ first side, then came back with ¬ contradict the position of the resistance of the first position.
Open buy GBP/USD1, 8850, 1 lot. After the price moves into GPB/USD1, 8840, we liquidated these positions (close sell). ¬ Rudder's, we sell on the open GPB/USD1, 8840. In these circumstances we had to suffer losses ¬ dah 10 points (GBP/USD1, 8850 - GPB/USD1, 8840), but we still have open positions that might sell benefits.
Locking. This is often done when we are in the circumstances of the floating ¬ profit / loss. To reduce the greater losses or maintain profitability, we lock ¬ losses or gains the profit position opposite the position of the first ¬. This system is often called the hedging position.
Open buy GBP/USD1, 8850, 1 lot. This is the first position. At the same time, we do sell open GBP/USD1, 8845, a second position as ¬. If then the price to GBP/USD1, 8820, and we conduct the liquidation of our two open positions, then the first position we are losing 30 points (GBP/USD1, 8850 - GBP / USD 1.8820), being in the position we are lucky the second 25 points (GBP / USD 1.8845 - GBP/USD1, 8820). In net, we only lost 5 points (30 points - 25 points)
Averaging. An act of repeating the same position as us in a state of floating loss, where the first position was left open.
Open buy GBP/USD1, 8850 1 lot, when we open the price down again with an open position in the price buy GBP / USD 1.8800. When the price rose to GBP/USD1, 8900 we can liquidate the position. Thus, the average capital we are GBP / $ 1, 8825 (GBP/USD1.8850 + GBP/USD1, 8800 / 2). 're Closing price that we can is GPB/USD1, 8900, thus, the total profit is 75 points (GBP/USD1, 8900 - GPB/USD1, 8825).