What’s Risk Management? | ELX Project
By: Elx Admin
Tags: Management, Investing, Risk, Elx

Risk management is one of the most important topics you will ever read about trading.

Why is it important? Well, we are in the business of making money, and in order to make money we have to learn how to manage risk (potential losses).

Ironically, this is one of the most overlooked areas in trading.

Many forex traders are just anxious to get right into trading with no regard for their total account size.

They simply determine how much they can stomach to lose in a single trade and hit the “trade” button.

There’s a term for this type of investing….it’s called…

GAMBLING!

When you trade without risk management rules, you are in fact gambling.

You are not looking at the long-term return on your investment. Instead, you are only looking for that “jackpot.”

Risk management rules will not only protect you, but they can make you very profitable in the long run. If you don’t believe us, and you think that “gambling” is the way to get rich, then consider this example:

People go to Las Vegas all the time to gamble their money in hopes of winning a big jackpot, and in fact, many people do win.

So how in the world are casinos still making money if many individuals are winning jackpots?

The answer is that while even though people win jackpots, in the long run, casinos are still profitable because they rake in more money from the people that don’t win.

That is where the term “the house always wins” comes from.

The truth is that casinos are just very rich statisticians. They know that in the long run, they will be the ones making the money–not the gamblers.

Even if Joe Schmoe wins a $100,000 jackpot in a slot machine, the casinos know that there will be hundreds of other gamblers who WON’T win that jackpot and the money will go right back in their pockets.

This is a classic example of how statisticians make money over gamblers. Even though both lose money, the statistician, or casino in this case, knows how to control its losses.

Essentially, this is how risk management works. If you learn how to control your losses, you will have a chance at being profitable.

In the end, forex trading is a numbers game, meaning you have to tilt every little factor in your favor as much as you can.

In casinos, the house edge is sometimes only 5% above that of the player. But that 5% is the difference between being a winner and being a loser.

You want to be the rich statistician and NOT the gambler because, in the long run, you want to “always be the winner.”

Trading in Futures, Forex and Crypto carries a high level of risk and can result in the loss of all of your investment. As such, Futures, Forex and Crypto may not be appropriate for all investors, that’s why we at ELX Asset Management apply the best possible strategies, action plans and risk managements on ground to reduce risks to the best minimum possible. You should not invest money that you cannot afford to lose. Before deciding to invest, you should become aware of all the risks associated with Futures, Forex and Crypto, and seek advice from an independent and suitably licensed financial advisor.

Risk Warning

Trading of complex financial products, such as Stocks, Futures, Cryptocurrency, Foreign Exchange (‘Forex’), Contracts for Difference (‘CFDs’), Indices, Options, or other financial derivatives, on ‘margin’ carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade any of these markets you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading these markets, and seek advice from an independent financial advisor if you have any questions or doubts.

To inquire about our recommended managed account plans or purchase an actual plan, please send us a message at https://www.elxproject.com/contact/ and we will be glad to assist you.