I occasionally drop in on a couple of the Forex forums out there to find out where beginning Forex traders need help and I try to answer questions when I can give a good response. One of the questions that comes up often has to do with calculating risk.
There is a lot of confusion out there amongst beginners not only about risk, but how leverage and interest factor into the calculation.
Needless to say, these forum posts end up being super long threads about how to calculate your leverage, then how to calculate your risk and some people even throw in an interest rollover calculation into the mix just to show you how smart they are.
Quite frankly, it isn’t that complicated. I feel bad for the beginners who have to read through these long, drawn out forum posts when the solution is very simple. If you are just getting started in Forex, here is how to calculate risk in Forex.
Easy, right? I’m all about making things as simple as possible.
I’m using Oanda as an example because they are my broker, I do not get paid to promote them. Check to see if your broker has a similar risk calculation on the order screen. If not, you may consider switching to a broker that does.
The great thing is that you can try out demo accounts from almost all of the brokers out there and see how you like their platform. So before you switch or even before you deposit real money, start demo trading and figure out which broker works best for you.