Strategies

The importance of Risk Management in Forex trading


Foreign Exchange (forex) is the largest market in the world, with a trading volume of about $5 trillion each day, compared to about $300 billion on US stock exchanges. Additionally, forex is the most liquid financial market and offers investments from just $1 in a variety of great brokerages. The point is that people choose forex as a trading vehicle because of the enormous sums that can be made so quickly and to diversify their investments.

The forex market also provides some significant upsides to new investors. These include low barriers to entry, flexible trade sizes, leverage, and no expiration dates on their contracts.

Our mission is to help you invest efficiently in forex and improve your results. Get extra valuable forex trading ideas from leading finance experts on the trading Academy and our free forex Telegram channel. When trading forex, we suggest you consider long term results.

What you will learn in this article

  • Understanding risk management in forex trading
  • How to trade forex efficiently with risk management
  • What is the best trading tool: AI trading or forex signals
  • How to use AI to trade forex and take advantage of the market
  • What are the best forex brokers to trade
foreign exchange market

An example of someone who turned from the stock market to the Forex market is Bill Lipschutz who turned $12,000 in stocks into $250,000 while attending Cornell University. But he ended up losing it all after one poor trading decision and because of the nature of that market. He then turned to Forex which gave him a much more stable platform, a much larger market, and better opportunities to profit. At one point he ended up making $300,000,000 for Salomon Brothers in a single year.

forex trading for beginners

As a young man trading stocks, Bill Lipschutz learned the importance of risk management, and that all trading entails risk. So, it’s impossible to be right 100% of the time when trading even on forex trading.

The difference between those who are successful and those who aren’t comes down to risk management.

Risk management operates on two levels. First at the trade level. Proper risk management at the trade level employees proper stop-loss orders and profit-taking targets. You never want to risk the entire amount put into a trade. So set good stop losses. The other side is the profit-taking target. Once you get into a profitable trade, it’s tempting to just let it run and run until you end up giving most of the profits back to the market. This is why it’s important to employ the structure of sell orders both above and below the entry price.

The second level of risk management is at the portfolio level. Bill Lipschutz learned early the importance of not risking his entire portfolio on any one trade. Richard Dennis, a profitable commodities trader and founder of the Turtles says:

“You have to minimize your losses and try to preserve capital for those very few instances where you can make a lot in a very short period of time. What you can’t afford to do is throw away your capital on sub-optimal trades.”

Dennis recommends risking no more than $2,500 on any one trade when trading from a total account size of $10,000.

Wiseinvest’s AI already knows the importance of risk management and accounts for it when it trades automatically for you with the AI forex trading system and with the AI forex signals system. Every trade is placed with proper risk management and 4 different position sizes already factored in for you making it as easy as just linking the forex broker account or copying and pasting the signals into your the forex brokerage of your choice.

AI can improve Bill Lipschutz’s forex trading strategy

When using our automated AI trading or AI forex signals, traders do not need to calculate the figures related to risk management: position size, take profit, and stop loss.

The best way to trade forex

There are two ways to invest with our AI in forex:

1. Automated with AI-Trading. Check out the 3 steps to trade automated with our AI.

automated trading with ai bot

By trading forex automated with AI, you will save time and improve your performance without monitoring the market and managing trading platforms.

With Automated AI trading you do not need MT4 / MT5 and other trading platforms to invest in forex. All forex trades are automatically placed into your broker account every time that our AI system identifies a new worthy trading opportunity. You can monitor the AI trading performance in real-time directly on our dashboard.

Automated AI trading benefits

  • Setup in 3 minutes.
  • Totally hands-off, from anywhere.
  • Invest from just $1.
  • APY of 40% over the past 13 years*.
  • Lightning-fast execution & no slippage.
  • No commissions, no management fees.
  • Portfolio with 40 different automatic strategies.
  • No MT4/MT5 or other platforms required.
  • Test with a risk-free practice account.
  • Trading results directly on our dashboard.

Don’t you have a broker account yet? Our AI is integrated to trade automated with the broker Oanda. Click here to open an account.

2. Manually with AI forex signals.

Wiseinvest also provides AI forex signals that perfectly fit into MT4, MT5, and any trading platform. To trade with our AI forex signals, you must simply copy the data you receive from each real-time signal into any forex brokerage account of your choice.

There are five unique variables for each AI signal, and each must be copied exactly, to match the performance of the signal as close as possible.

Each AI forex signal alert consists of the following five data points:

  • Symbol (forex pair)
  • Direction (long or short)
  • Position size (number of units or lots)
  • Take profit (price level to exit with maximum gain)
  • Stop loss (price level to exit with maximum loss)

Check out how to trade with our AI forex signals.

  1. Subscribe to a Wise-Plan.
  2. Open a Brokerage account. Check this article about the best forex Brokers.
  3. Set an amount and a position size on our Wiseinvest dashboard.
  4. Our AI will send you real-time trading alerts by email and Telegram.
  5. Copy the signals and paste into your Brokerage account.

All forex signals are sent every time that our AI trading system identifies a new trading opportunity. Our trading strategies are developed on a variety of time frames such as 4 and 8 hours.

Wiseinvest AI forex signals are Market Orders and you do not need the entry price. You can copy each signal while it is available on our dashboard. We do this way to assure that traders will just place signals while they are good to be traded.

You can trade forex with our free forex signals clicking here, or with our Premium subscription that provides you unlimited AI signals and automated AI trading in partner brokers. Whether you are a beginner or a professional forex trader, our AI trading system can help you save time and improve your trading performance. Get started with free AI.

When investing through Wiseinvest automated AI trading or AI forex signals, you do not need to calculate pips and change the leverage in your forex broker account. Learn more about leverage in forex trading by clicking here.

What is the AI performance in forex trading?

The Win Rate of our AI shifts as indicated by the period and can reach up to 95%. The performance depends on the proficient wilderness estimation metric, which implies that our model is beneficial at whatever point the Win Rate is more prominent than 60%. All techniques of our AI Trading framework look for stable returns and adequate outcomes to accomplish a normal return of 40% every year (APY), without the utilization of high influences.

We comprehend that what is important in forex trading is the conclusive outcome. Along these lines, the financial specialist needs to consider that Win Rate isn’t generally the best measurement to gauge execution in forex, as other signal suppliers unveil. For example, out of 100 exchanges, it is conceivable that lone 1 exchange is sufficient misfortune to make the 99 exchanges not productive. For this situation, the Win Rate would be 99%, yet the conclusive outcome would be unfeasible (negative).

We center around the arrival of 40% of APY and not simply on Win Rate.

It is basic to see that forex brokers may charge spreads, commissions, and overnight expenses in your trading account, and these elements can influence the AI execution. You can check our forex trading history to see more about AI Trading execution by clicking here.

How much do I need to trade forex with AI?

You can begin in forex trading with free AI signals or AI Trading records and make a store from only $1 in the brokerage. It is likewise conceivable to test utilizing a hazard-free practice account with our AI Trading framework. In any case, to do a proficient hazard the board in genuine records, we recommend you start from at least $100. Notice that some forex brokers require diverse starting stores to trade forex.

What is the trading strategy of our AI?

Our AI procedure is the mix of various AI Trading frameworks, with more than 100 features, that characterize 40 distinct techniques which at the same time consider: Quotes of the 28 forex pairs, Supports, and Resistances in various time periods, Trends and Counter-patterns, Cross-markers, Index of each pair, Economic Calendar, Investors Sentiment.

Our AI examines those fundamental, technical, and sentiment factors that influence forex trading, and all models are assessed continuously utilizing various loads. In the wake of finishing the investigation, the decision of the signal emanation technique is made considering the improved probability of momentary benefit and the sum accessible for speculation.

Using technical analysis, our calculation considers not just the examples of different patterns, including backing and obstruction levels and cross-pointers, yet our AI is likewise ready to make its own ongoing record for every money pair, that is utilized to distinguish what is the best course and target.

Comparable to fundamental analysis in forex, the AI makes a connection inside the financial schedule to discover news information that can influence explicit cash sets.

Learning Finance Is Critical to succeed in forex trading

Having financial skills can bring success in your professional and personal life. We always recommend learning more about finance and trading. This is why we founded the free Trading Academy. It is also important to keep up to date on the most important economic news from serious sources of financial information. Our automated AI trading system can analyze economic news from Bloomberg, Forbes, and the New York Times in real-time, to evaluate the impact of forex trading.

We are engaged in democratizing the retail forex trading market through AI solutions. We work hard to provide financial education, allow anyone in the world to invest easily with Automated AI trading and free AI forex signals. Our AI platform is integrated with AWS, IBM Watson, and Google AI.

Enjoy other free articles about forex trading on the trading Academy and on our free forex Telegram channel.

Disclaimer: Forex and Contracts for Difference (CFDs) are complex instruments and come with a high risk of losing money due to leverage. Forex trading is not suitable for everyone. You should consider whether you understand how forex and CFDs work and whether you can afford to take the high risk of losing your money.

The forex brokerages displayed shall disclaim the overall performance of traders in their platforms. Oanda warns that 76.8% of retail forex traders lose money trading CFDs. XTB warns that 80% of retail forex traders lose money trading CFDs. FXCM warns that 74.74% of retail forex traders lose money trading CFDs.

The performances aforementioned are not related to Wiseinvest AI forex trading and AI forex signals system. You can check the performance of our AI forex system on our dashboard.