Forex Training

Class 3

Risk Control

Controlling risk is one of the most important ingredients of successful trading.  While it is emotionally more appealing to focus on the upside of trading, every trader should know precisely how much he is willing to lose on each trade before cutting losses, and how much he is willing to lose in his account before ceasing trading and re-evaluating.  

Risk will essentially be controlled in two ways:  1) by exiting losing trades before losses exceed your pre-determined maximum tolerance (or "cutting losses"), and 2) by limiting the "leverage" or position size you trade for a given account size.  

Cutting Losses

Too often, the beginning trader will be overly concerned about incurring losing trades.  He therefore lets losses mount, with the "hope" that the market will turn around and the loss will turn into a gain.  

Almost all successful trading strategies include a disciplined procedure for cutting losses.  When a trader is down on a positions, many emotions often come into play, making it difficult to cut losses at the right level.  The best practice is to decide where losses will be cut before a trade is even initiated.  This will assure the trader of the maximum amount he can expect to lose on the trade.

The other key element of risk control is overall account risk.  In other words, a trader should know before he begins his trading endeavor how much of his account he is willing to lose before ceasing trading and re-evaluating his strategy.  If you open an account with $2,000, are you willing to lose all $2,000?  $1,000?  As with risk control on individual trades, the most important discipline is to decide on a level and stick with it.

Determining Position Size

Before beginning any trading program, an assessment should be made of the maximum account loss that is likely to occur over time, per lot . For example, assume you have determined that your worse case loss on any trade is 30 pips.  That translates into approximately $300 per $100,000 position size.  Further assume that the $100,000 position size is equal to one lot.  Five consecutive losing trades would result in a loss of $1,500 (5 x $300); a difficult period but not to be unexpected over the long run.  For a $10,000 account trading one lot, this translates into a 15% loss.  Therefore, even though it may be possible to trade 5 lots or more with a $10,000 account, this analysis suggests that the resulting "drawdown" would be too great (75% or more of the account value would be wiped out).  

Any trader should have a sense of this maximum loss per lot, and then determine the amount he wishes to trade for a given account size that will yield tolerable drawdowns.




 Margins start as low as % 0.5 (optional)
Client's of the CBF accounts between US$ 3,000 to US$ 20,000 will get a leverage margin of %0.5 as an option, between US$ 20,001 to US$ 50,000 will get a leverage margin of %1 as an option, and from US$ 50,001 will get leverage margin of %2. (NOTE: %2 is the default margin of all mentioned accounts).
Spreads start as low as 1
In CBF Trading system spreads start as low as 1 in Forex. You can read full list in the CBF Trading - Market Sheets.
CFD and Forex
Client's can trade now with CFD's (equities, indices, commodities, bonds, interest rates, forex, inflation). The hedging facility is available on all instruments.
Commission-Free trading
CBF do not charge a commission on its services and you can read about the Free commission by walk through CBF Trading - Market Sheets.
US$ 3,000 Minimum to open account
Live account with CBF Trading start from minimum deposit of US$ 3,000 only.
Dedicated accounts
CBF Trading Division is a part of Century Brothers Financial Limited, the trading giant in the financial industries and the first company offering dedicated accounts for the US$ 100,000 clients with independent third party "AA+" banks and high security solutions for any other clients fund.
All in one platform
Within one account you can trade CFD and Forex. In CBF Trading system competitive pricing on multi financial instruments, including indices, real-time margin calculation and risk-management notifications, easy software and technology for complete trading confidence, visual trading and one-click order entry, and place trailing stops and other order types to help manage your risk. You will get totally FREE services such as real time quotes, real time charts, analytics, and multi languages.
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Legal Disclaimer: Century Brothers Financial Limited is an authorized financial company in British Virgin Islands. Registration number 1458255 issued by BVI Financial Services Commission (FSC), Registrar of Corporate Affairs under the BVI Business Companies Act, 2004. However, Century Brothers Financial Limited and its trading division ("CBF Trading") do not trade for or on-behalf of the clients who will trade directly to the market using CBF Software only.

Century Brothers Financial Limited and its trading division ("CBF Trading") do not hold any of the clients treads. The liquidity of CBF Trading prime is offered directly from a number of prime world wide banks (Up to 16 "A+" level banks and above), for that Century Brothers Financial Limited and its trading division ("CBF Trading") are not concerned of clients profits or risk. So CBF Trading is the most transparent trading system in the market. Click here for an important risk disclaimer and website warning.

Century Brothers Financial Limited and its trading division ("CBF Trading") are not agent and/or affiliated to any financial or trading company.

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