This is Arturo from Pz Trading, I hope my mail finds you well. The reason of my message is to introduce the new risk management indicator, which monitors the vital constants of your trading account.
Did you know that 99% of retail traders fail due to poor risk management? If you don't have any of my trading tools yet, this is the first one you should buy! It is a must-have tool for novice traders.
Proper risk management must be at the very core of your trading activity, regardless of your entry, management and exit strategy. And by proper risk management, I mean leverage and exposure control.
Leverage is a powerful tool, but like most powerful tools, it can also be destructive. Most brokers offer up to 1:400 leverage, but this should not be confused with the leverage you actually decide to allocate. Leverage is the ratio between your equity and the total market exposure of your trades. The more leverage you use, the smaller the market movement needed to decimate all your investing capital.
Leverage Used = Market Exposure / Account Equity
For example, if you buy 0.2 lots of EURUSD on a 10,000$ account, you are allocating 1:2 leverage. In other words, the market exposure of your account is twice the account equity. This also means that a 50% retracement from your entry price will decimate all your investing capital.
Using too much leverage is like suffering tachycardia in your own body: it can only be endured for so long until the body collapses. Inevitably, having more market exposure increases the odds of suffering big drawdowns. How much leverage should you use?
- A leverage between 1:1 and 1:3 is good.
- A leverage of 1:5 requires a lot of caution.
- A leverage of 1:10 is dangerous and should be avoided.
Other issue to consider is absolute net exposure to currencies. For example, you don't want to be long EURUSD, EURCHF, EURGBP and EURJPY at the same time, since your account would be over-exposed to the whims of the Euro. Instead, you want your net exposure to individual currencies at zero, or close to it. For example, if your net exposure to the USD is widly negative, find a chart where you can go long USD and decrease your USD exposure.
The Pz Risk Management Indicator has been designed to keep your account healthy at a very affordable price: it costs only 99$! Besides, if you are an existing customer, you can also benefit from an automatic 20% discount!
