Just about all of us (I’m referring to forex traders) have heard how risk management is one of the top 2 or 3 key skills to master in becoming a successful trader. That is certainly true, but is often easier said than done. Perhaps your trading platform has some tools built in which help identify and monitor your risk, but perhaps it doesn’t. Or, perhaps you’re actively using a number of different trading platforms across multiple brokers and accounts – how do you manage your collective risk then? This is not an uncommon situation for professional forex traders, but the challenges of managing risk are very real.
Trade on Track helps to calculate and monitor your risk in all your open trades, regardless of what trading platform(s) or broker(s) you use. This is an incredibly powerful feature and takes a lot of the mental pain away from you having to manually calculate your exposure and risk in the market.
For instance, as you enter a trade, Trade on Track will automatically calculate your risk/reward potential, based on the stops and targets you enter. This can be enlightening in itself, because what you thought was an even risk/reward ratio when you entered the trade, may in fact not be.
You can see at the bottom of the screenshot above, that the Trade on Track system has also warned me that this particular trade places me over my preferred risk of 1% per trade (this is a level I get to set in my profile). At this point, it’s very easy to adjust the stop loss or the number of lots traded to reduce the risk to a level that I’m comfortable with, or which meets my trading rules.
In addition to the per-trade risk calculations, Trade on Track also tracks overall risk – across all open trades. This calculation is prominently displayed at the bottom of the screen like this :
So, at a glance you can see your average risk per trade (as a percentage of your account balance), your total risk, and also the risk per currency. The risk per currency is further broken down into two sections: a total per currency, and a hedged calculation per currency. Quite often your overall risk can be reduced by hedging trades, but you still need to be careful that each trade you take conforms to your trading rules – don’t just take a trade for the sake of hedging. And, if your hedged trades are based on different time frames – (for instance, one trade based on an hourly chart, the other on a daily chart) – it’s probably more accurate to consider your actual risk as the total figure rather than the hedged figure. I’ll leave you to think about why that would be 😉
Good luck and trade seriously!