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Risk management concerns with the process in mitigating risks in a volitile market environment. It involves risk measurement and assessment, risk response strategies etc. Risk management is important when you trade in the forex, futures and indices market. Your account equity could be negatively impacted if you fail to consider your overall position size, the number of trades placed at a point in time, stop/limit level and the use of leverage.


Please note: Margin FX and CFD trading carries a high level of risk and is not suitable for all investors.  Please read the Risk Disclosure Statement  before choosing to start trading.   

To effectively manage market risks, first of all, you must sort out your trading strategy before each trade, including your trading logic, stop-loss and take-profit levels, the ratio of trade size to your equity and, the ratio of leverage, etc. If you have managed these things well, in most cases a single trade in the context of market fluctuations will not cause a significant loss to your position. When a black swan event occurs leading to extreme market movements, great gaps may prevent your position from being closed at the stop-loss level. It is therefore important for you to keep sufficient funds in your trading account to control risks.


Please note: Margin FX and CFD trading carries a high level of risk and is not suitable for all investors.  Please read the Risk Disclosure Statement  before choosing to start trading.   

After a position is opened, you should constantly check whether your funds are above the maintenance margin and remain above it by a certain percentage. When the price goes in a direction unfavorable to your position, you must provide extra margin to maintain your current position. If you are unable to deposit additional funds, you will need to close one or more trading positions to reduce the maintenance margin required for your account.

In the event of insufficient margin, you must meet Mitrade's “Margin Call” requirements. If the requirements are not met, Mitrade has the right to liquidate open positions.


Please note: Margin FX and CFD trading carries a high level of risk and is not suitable for all investors.  Please read the Risk Disclosure Statement  before choosing to start trading.   

In addition to market movements that will significantly impact your position, you need to be aware of operational risk. Your communication network, mobile phone, computer and other equipment being blocked or other external events may delay your trading. Mitrade will not take responsibility for your operational errors unless the trade is delayed due to Mitrade's errors, negligence or dishonesty. You should ensure that trades are carried out only when the network is secure and your trading equipment is configured properly.

Another common source of risk is exchange risk. As the currency in which your trading product is denominated is not necessarily the same as your national currency or the base currency, you will also face the risk of exchange rate fluctuations between the two currencies.

Counterparty risk and credit risk are also important. By trading at Mitrade, you enter into a trading contract directly with us. If we are insolvent, we may not be able to fulfill the obligations of the trading contract. The CFD is a derivative of over-the-counter trading that relies heavily on the platform's ability to execute trades and perform obligations. You may not have any recourse to the underlying assets of the CFD.


Please note: Margin FX and CFD trading carries a high level of risk and is not suitable for all investors.  Please read the Risk Disclosure Statement  before choosing to start trading.   

Before trading, each investor should consider "If the trade fails, how much do I wish to lose?"

If your stop-loss level is far from current price, you may have to endure a long period with a large floating loss before the stop-loss order is triggered. When stop-loss is reached, your account balance may drop significantly. So next day when you look at the loss of the previous day on the platform, your heart will sink.

With that in mind, you will start trying to set the initial stop-loss at a reasonable level. When the stop-loss price is reached, what you could do is only to wait patiently for the stop-loss to execute.

If you wish to avoid a major loss in a single trade, you may place a stop-loss order before each trade. The best approach to risk control is, assuming that your trade fails, to find the price level that you would call a failed trade, and let it be the stop-loss.


Please note: Margin FX and CFD trading carries a high level of risk and is not suitable for all investors.  Please read the Risk Disclosure Statement  before choosing to start trading.   

Domination by one's emotions often explains why the investor suffers perennial losses.

For example, some investors have established their own trading strategies that have undergone historical backtesting, and have implemented them in their trading. Influenced by market fluctuations when the market opens, they may rush to close their positions before their take-profit/stop-loss orders are triggered as planned, preventing their trading strategies from being effectively implemented. This is a pitiable situation.

This will seriously affect the investors' profit-and-loss ratios from implementing the consistent strategies in the long-term. This is the typical negative impact of sentiment-led trading. Remedies include trading with small positions when one's sentiment fluctuates, or even using a demo account until performance becomes stable before trading with the live account.


Please note: Margin FX and CFD trading carries a high level of risk and is not suitable for all investors.  Please read the Risk Disclosure Statement  before choosing to start trading.   

Leverage is a double-edged sword. If used properly, it definitely allows investors to earn high returns with small amounts of money. If you use an improper trading strategy, or your leverage is high, but your account is under-funded for a long time, it will greatly increase the chances of your loss exceeding your available balance.

Two methods are recommendable. Firstly, with a strategy in which you have confidence, you may trade with relatively high leverage, while with a less credible strategy, you can deposit more funds in the account to improve account security. Secondly, you should set a margin-equity ratio for your overall position, and open a new position only when that ratio is not exceeded to avoid severe losses due to high leverage.


Please note: Margin FX and CFD trading carries a high level of risk and is not suitable for all investors.  Please read the Risk Disclosure Statement  before choosing to start trading.   

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