What are your methods for capital preservation in forex trading ?

Question

http://capitalpreservation.info/

Answer 1

Basically its all about what your willing to risk. Traders go through their whole trading existence not knowing how much to risk. Its true when you here risk big, win big, risk small, win small. Finding that mid point is whats important that comes from mainly your own mentality.

Carefully structured money management prevails most forex traders. For eg. having a system that has a 40% win rate and 60% lose rate but still gaining on the equity curve. How is this? Well if you think about it, its having a greater balance on your winning trades than your losing.

Hardest part and most dont realize at first is seeing your strategy losing most the time so its harder for the trader to visualize that he will come out on top

Answer 2

Very Nice question!!!! This will help many traders to learn new skills and will broaden their trading perspective.

For investors using the capital preservation is a strategy to achieve their goal, they must ensure their portfolio is producing a return that is at least equal to inflation. The techniques i use to preserve my capital is:

1. I usually make use of limit order, stop loss etc to book my profit.

2. The thing i dont forget is "If you lose 50% of your capital, you have to make a 100% profit just to recoup all your losses."

3. Limit my  risk exposure to only trades that are very likely to go my way.

4. Above all my dealer http://www.finexo.com/ always alert me about my pair currency going down so that i can squareup my position soon.

Answer 3

Basically capital preservations in any market consists of a few things.

First, you have to watch your leverage limits to make sure you have a comfortable buffer at all times.

Second, Obey you stop out limits, that is very difficult for most beginning traders to do and they let losers ride.

Those two things alone are enough to trade well. Later on you can use things like hedges (like buying positions that will go up if yours go down) to protect yourself. Or you can buy options as a form of insurance if your investments fail.

Answer 4

To make profits without losing your capital from Forex Trades is something I thought is not possible.  

But my forex trader friends who are professionals tell me that capital preservation is possible.  in fact, money and risk management is important to survive long term in forex trading.

I looked at the site above and the Lethal Forex System looks good.