Mastering Risk Management with MetaTrader 4 Tools

Worldwide, application of risk management is significant when it comes to trading, as MetaTrader 4 provides traders with access to several massively strong tools aimed at achieving the maximum possible profit per minimal risk. Whether you are a new comer to the trading markets or a veteran trader, it is very important that you know the proper utilization of these tools.

Stops are among the few effective risk management tools that are available in MetaTrader 4 platform is the possibility of placing stop loss orders. A stop-loss order offsets a trade when the market price reaches a specified level thereby placing a check on loss if it occurs. For instance if you employ a trade with a target of 1.2500 but desire to avoid much higher losses you set a stop of 1.2450. In simple terms, you do not have to worry about the market dropping to that level because your position will automatically be closed thereby avoiding losses. Hence, stop loss orders might be used in your strategy to guard your capital and minimize your exposure to risks, and all this even when you are not physically at your trading screen.

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MetaTrader 4 equally offers its traders a take-profit order in addition to the stop-loss orders they are aware of. These orders are those that are meant to help you to close a particular trade once you have gotten a particular level of profit. Taking profit orders are great to make sure that traders set their profits aside when the market starts to position itself to their own favor. These measures, stop-loss and take-profit, named risk/reward ratios would allow placing evident rules for further profits and losses.

This is also useful in risk management, and MetaTrader 4 has what is called the trailing stops. Trailing stop, as in stop-loss, is a type of stop order that revises the stop price to a more favorable position as the price trend continues. For instance, in a trending trade the price moves up 50 pips, the trailing stop will track it and lock a percentage of your profits. If the market retrace and touch the trailing stop, the trade will be closed but you get your profit locked. This dynamic feature helps you to lock more profit from trending markets while at the same time limiting the chances of losing any realized profit in the negative trend of the market.

The other equally important risk management feature available in MetaTrader 4 is position sizing. It should be very clear that the best traders do not put high risk to their money for any given trade. In MetaTrader 4, traders are able to change size of their positions depending on the available balance of their account and their aggressive approach. Essentially, with smaller position size, the trader can be able to guarantee that a loss made on any particular trade will not affect the rest of the portfolio. This is especially important in order to avoid spending too much cash and to remain profitable in the long run.

Besides, MetaTrader 4 provides the options of risk management and use of alerts. They give a notification when a certain price is achieved or when a particular market condition is achieved which can be used to reduce susceptibility to making improper decisions during high volatility. Setting of alerts is more advisable as you are more aware and can make good decisions rather than act on impulse of the movement of the stock market.

Finally, MetaTrader 4 also provides backtesting of the traders’ risk-control strategies on the historic data before these strategies are used in Live Trading session. You can also use historical analysis of your strategic plan to correct the plan and improve your confidence in handling risks.

MetaTrader 4 contains set of features used for risk management in different ways. Starting from stop loss and take profit to trailing stop outs, position sizing and alerts, all these elements provide traders with that much needed freedom to operate in one of the most volatile markets in the world, the forex market. When you are in control of these risk management tools, you will enhance your possibility of earning sustainable revenue despite the oscillating market environment.