Okay, so we now move on to the topic of risk management, which for me, and all professional traders is the holy grail of trading success. It's really, really important that we think about capital preservation first, and then capital growth second. Sadly, as a trader, we will have losing trades. So when they come along, we want to make sure that they're kept very, very small, so they don't damage our capital and unravel a number of good profitable traits. So let's take a little bit more of a look at risk management terms of what we need to do in our approach to make sure we preserve capital at all times. But firstly, an overview.

So as I mentioned, risk management, which is also known as money management is the management of your money is the holy grail of trading success. Without it, you're simply gambling because if you never know what your worst case scenario is, then you're gambling you're tossing a coin and you're hoping for the best so We always always want to know before we even take a trade what our worst case scenario is, and then we're prepared to accept that and say that if that happens, it's only a small loss and we can recover from that. rather than it being damaging a trader without any capital can't make any money. So preservation of your capital should always be your first thought and capital growth second. Now when a boxer gets into the ring, the referee always says to them, protect yourself at all times. That's exactly what should be front of mind as you as a trader, protection of capital first growth Second.

Okay, so going into more specifics now we recommend to keep your risk low on every single trade so that you grow your account gradually month by month, your losses are kept small so that your profits can override them and generate your consistent profits on a month by month basis. Now we use a small percentage of account risk on every single trade We advise you to do the same. Now if you do risk to risk more, which you can do, please do so with the understanding that not only will your gains be bigger, your losses will be too and you can't underestimate the psychological impact. When you start to risk big, it starts to play tricks on your mind as well, from a psychological perspective, if you can take a trade knowing that actually your worst case scenario is x, and you're more than happy to accept that, psychologically, that is a wonderful position to be in because it takes away an element of the fear.

And always start small, naturally, because when you first start to try the news, it's going to be fresh, it's going to be new. So of course, it's going to take a bit of time for you to master these skills. So start small, with 1% risk per trade of your capital that you've funded your account with. And then as you grow your experience, you grow your results and more importantly, you grow your confidence and yes, we can absolutely look to risk a little bit more per trade but never creep any higher than 3% risk per trade, that'd be the top of the level. Again, main reason for that is a psychological one. Once you start to risk big, it starts to play tricks on your mind, which can cause you to then become very sporadic with your trading approach, we want to be as logical as possible.

And the best way to be logical is when we call calm and collected, which means that we're going into trades risking an amount which we are happy with. Okay, so how do we work out because the broker is going to want to know where you want to get into the trade, that's your live execution, where you want to put your stop loss and where you want to put your target, but also, they're going to want to know how much do you want to trade. So this is known as your trade size or your trade volume. So the golden calculation is very, very simple, but massively important. So let's go through that. So you take 1% of your game, and obviously with experience that can move to 3%.

You take 1% of your cap, and this is your account balance, so how much you funded your trading account with You divide that monetary amount by the pips at risk on the trade, which we know is very easy to work out, because the risk in pips on every single trade is going to be 80. So it's 1% of your account in monetary terms divided by 80. And this will give you an amount per pic that you can place on the trade. Now I mentioned that your lot size or your volume, we're going to go through this and explain it in a bit more detail. But just think of the amount per PIP for now. Let me show you an example.

So you're a trader that has 10,000 pounds in your trading account. 1% of that is $100, as it says here, and you can relate this to any account, denomination that you have. So if it's a parent account, a euro account, etc. You do the same process. So a $10,000 account in this example 1% of that account is $100. That's the maximum I'm prepared to risk and lose.

If the trade doesn't go in my favor and stops me out. If it stops me out, we'd have to go 80 pips because that is where my stop loss goes on every single trade bear in mind that what we talked about is not every losing trade is going to hit your initial stop loss. Because of the management techniques we're going to use IE moving our stop to break even or after an hour, cutting the trade for a smaller loss but we need to go into the trade thinking that our trade could hit our worst case stop loss which is 80 pips so we always risk manage on the full 80 pips, so $100 divided by 80 then says that we can put on this trade $1 25 cents per PIP so every PIP we make, we make $1 25 every PIP that we lose is minus 125.

Up until our 80 pips stop loss is hit, and we lose the $100 on that particular trade. However, I've also mentioned here, it's naught point one, two lots per Pip, or 12,500 units equivalent, so This is what we're going to go through on the next slide to explain that because in trading, it's not as black and white as just $1 amount per Pip, they actually do professional trading institutions such as FX Pro, dealing lots or units of volume, but we're going to explain that on the next slide. But it's a very simple calculation. However, you can't underestimate its importance. In terms of helping you with this. I'm going to show you an online calculator that's going to do the majority of the work for you and make your life a lot easier, but we'll come on to that in a second.

Just to confirm that so working out your trade size or volume, remember we use a fixed stop loss of 80 pips meaning that we can use a fixed lock trade size or a fixed position size, so it's gonna it's going to be the same position size every single trade. So remember that helps with your speed of execution, because you will know every single trade, your position size is going to be the same or you can at least work it out before you take the trade so you're not spending five minutes working it out when the markets moving Without you, we want to just get our position size sorted. And then as soon as we pull the trigger, we're into the trade we're not having to worry about our risk management because that's already been done. And the reason why we do that we have the same position size every single time.

Remember I mentioned earlier that we expect to be picked positive at the end of the month, it was made more pips than we've given back, meaning that we're positive. So if we've made a positive amount of pips, and it's the same amount per Pip, I $1 per Pip, we will inevitably be making money at the same time so when we make pips we make money as a byproduct of that. Okay, so let me explain to you lots of volume because depending on which platform you choose, whether you choose the MT four or you choose the C trader, this will determine whether you use lots or units of volume of currency. So let me explain so in the professional trading industry, trading volume is done in lots Let me explain the various locks. So you got your, your your standard lock, your micro lock and your nano lot.

So your standard lock in terms of its denomination would be 1.0. It's the equivalent of buying 100 buying or selling 100,000 units of the base currency per trade, which in layman's terms is the equivalent of $10 per Pip. So that's what it means in layman's terms, a micro lot is a 10th of the size. So it's naught point one, which is the equivalent of buying or selling 10,000 units of the base currency, which in layman's terms, is roughly $1 per Pip. And then finally, if you've got a small account, then you will use nano lots which is a lot denomination of naught point naught one a hundredth of the size of a standard law, which is the equivalent of buying or selling 1000 units have the base currency which is roughly naught point one, zero Pip. The beautiful thing about this means that you don't need a huge amount in your trading account to get started.

Because you can take trades which are nano lots, or position sizes in nano lots, which is the equivalent of 10 cents per PIP or if you're in the UK, the equivalent would be six p per Pip. So you can trade with very, very small quantities as a new trader as you get used to trading the news. And then obviously, you can build up your size as you grow with confidence, experience and results. So as you see here, just to confirm that one standard lot, you would be buying or selling 100,000 units of the base currency portrayed as a moot point one standard lock, which is a micro lock would be buying or selling 10,000 units base currency. And then finally your nanobots which is your smallest position size, you'd be buying or selling 1000 units at the base currency per trade, which the equivalents per PIP in monetary terms is $10 per PIP for standard law $1 for microwatts and naught point one 04 nanobots and you can use multiples of these.

So you can use two standard lots, which would be $20 per PIP three standard lots, which would be $30 per bit, etc, etc. Now, I find this personally quite hard to understand and digest. So I'm going to give you a tool which does the legwork for you and you're literally copying and pasting into a trade ticket when you're about to place the trade. So here it is a quick cheat need to go to the following website WW, forex com forward slash position, dash size dash calculator, fill in all your details, as you can see here, so it's very easy to do. Firstly, you've got your account currency, you will put that in the currency that you've funded your account with. I've used dollars to keep in line with the example we went through earlier.

The account size is how much you have in that account. So $10,000 in this particular example, the risk ratio is how much you want to risk of that account size. So we've put one 1% over Okay, and then the stop loss is always going to be pips, then you can select the currency pair that you are wanting to trade. In this example euro dollar, when you then click on calculate, it will pre populate these boxes underneath. So go through put all your details in, click on calculate, and that will pre populate the results. And this will if you trade site, let's go through the results and what they mean.

So the box one is money in your your currency that you are funded your account with. So in this example here, it's $1 based account. So it's saying that if this trade get stopped out, it would be a loss of $100. So that's your sanity check. You always want to make sure that that amount there is the amount that you're prepared to risk. So in our example, we will prepare to risk $100 that confirms it that backs up that everything's been calculated correctly.

And then more importantly, are these two elements down here is the units which is the volume and the lats which is by its very nature a lot. So as point two says unit is the volume you are buying or selling, you will use that on your C trader platform if you've downloaded the C trader platform, and all you do is you literally copy that number there 12,500 and paste it into your trade ticket and I'll show you how to do that in accompanying videos. If you're using mt four however, you will use lots and again we can do the same process is of simply copying that naught point one two copying that and pasting it into our train ticket. Again, I will show you how to do that in the accompanying videos as well as bringing up the position size calculator and talking you through that process.

But it's a wonderful tool again another free tool that you can take advantage of to make sure that your position size and your risk management is spot on every single time and you will do this before you place the trade and then you will input into your trade ticket Then all you're waiting to do is listening to the news, make sure that your trade plan comes together. And then you are clicking the button, you're going into the trade that you want to go into, for the position size you want to trade out. And as it says, there, it's doing the hard work for you this calculator, sanity checks your own calculation. Remember that top box there is your sanity check, do I want to risk $100? Yes, that's why I'm prepared to risk great. If it's a different number, then obviously, you've done something incorrect, and you just need to change your numbers.

And as it says there, please view the video to see in action to bring you up to speed and have a play around with it, get used to it, get comfortable with it. But like all of the resources I've given you throughout this course, they're cost effective, and they're very, very efficient in helping you become the most proficient trader possible, trading the news. Okay, so just to bring it all together. To summarize, keep your risk small on every single trade. We suggest no more than one to 3% per trade. Remember But that we based on your experience, your confidence and your results, we always want to preserve capital first, think about growth.

Second, slow and steady wins the race, you will be amazed at how much profit you can generate over 612 1824 months. But if you don't manage and you blow up on one trade, it's all over. Take a slow and steady approach, and you will make some fantastic returns over time. Use the online calculator to help work it out. I know it can become a little bit complicated when you think about lots of volume. But essentially, that calculator makes your life easy.

It does the legwork for you. And then you can simply copy and paste it into your trade ticket. Once you've obtained that information, it's very, very easy to pop it into your tray to get. Remember speed of execution is really, really important. I keep jumping on about that. So you want to have your trade size worked out in advance.

You don't want to be doing it afterwards because you're going to miss out on time and profit and tomorrow Bring it all together to bring it all to life for you. There are videos within the curriculum demonstrating live, how to work out your trade size and how to input it into your trade ticket. So you become absolutely comfortable with that. But do not underestimate the power of risk management. It is the holy grail to long term success. Keep your losses small.

Make your winners as big as possible and over time, your profit will I run your losses