Is A 1 Percent Risk Strategy Feasible In Forex Industry?
For those who do not know, it is a method where investors only endanger 1% of their entire fund. For the sake of calculation, if a person has 100 dollars in the deposit which is uncommon as most have 10 dollars initially, he is allowed to risk 1 dollar. While this method has got a following in the community, many think it is not realistic. It is only possible for big traders who have got thousands of dollars. For them, this mere percentage is a substantial amount but not for beginners because it would be crazy to risk 1% of the investment. The majority start with the minimum balance and this rule becomes insane to follow. There is a growing debate whether this is even viable or not as many do not seem to comprehend the system.
We are not going to take any side but only provide some justifications based on our understanding. If you are wondering to follow, read this post as it may help to take up the decision. Keep in mind we are liberal and do not take sides for any party. This article only presses the concerns regarding this strategy.
How can I ever make a profit with such a technique when I have only 10 dollars?
This is the legal minimum with most brokers. As clients are required to deposit money to get a live account, many prefer 10 dollars. This is not much but sufficient to allow us to test this industry personally. However, have you ever thought about how much is 1% of 10 dollars? It is only 10 cents, which implies it would take an eternity for a trader to generate substantial revenue. To put this perspective into words, an individual has to win 100 orders to make 10 dollars of profit by abiding this method. This sounds unbelievable and that is why many choose to simply ignore. Currency trading involves risks but it does not mean one has to play safe all the time.
Besides, when losing is inevitable what is the use of protecting funds? All these questions contradict this formula. Moreover, people are obsessed with risks as it gives them a thrill. This encourages them to use leverage to make enough money consistently. If they lose one order, they have to incorporate other techniques to recoup the capital. This is not possible with this method. Many view this as a mental trap to refrain investors from achieving their potentials. Only wealthy individuals can follow this rule in their careers.
Invest a decent amount of money
You must invest a decent amount of money to start living your life based on trading. The top traders at the Mena region always encourage trade with big capital as it reduces the stress and allows the traders to trade with managed risk. Visit the site of Saxo and you will notice that they have minimum deposit requirements. The elite brokers know very well that if you make trades with a small amount of money, you won’t be able to earn most of the time. For the safety of the capital, you should be risking a very small amount of money even though you have a big investment.
This provides a healthy, sustainable outcome
A specific group believes this is for the greater good of traders. It may seem impossible to implement but once it is done, it can save the investment from blown away. It restricts from undertaking perilous decisions and keeps them on track. As people inherently endanger their capital frequently, this is essential to keep their activities under control. It will be difficult initially to start with the small fund but the benefits can be reaped at a later stage. Consistency is the key to survival in Forex and this helps to achieve this goal. Traders should understand this concept and use this in their planning to reduce the chance of going broke.
