Joining a forex rebate program can be an integral part of your risk management strategy. When you're trading forex online, the speed of the transaction means that it can be very easy to lose control of your trade. Because of this, you have to find some way to manage your risks in order to avoid losing too much money. Without a risk management strategy, trading is more like gambling than speculation.
The first step in any risk management strategy is to measure the odds that your trade will be successful. This can be a complicated process, involving factors such as the price trend and the financial condition of the company issuing the stock. Once you've estimated the odds that the stock price will go up (or if you're shorting the stock, that it will go down), you can determine which strategy to use. Two possible strategies are the Martindale and ant-Martindale strategy. The former strategy involves doubling the amount you invest every time you make a losing trade, in the hope that it will eventually reverse itself. The anti-Martindale strategy, on the other hand, involves halving your investment whenever you make a losing trade but doubling it when you make a winning one.
The next step is to determine just how much you want to risk per trade. One way you can allocate your trading bankroll is to designate a certain percentage per trade, i.e. 2% of the total. If your trading capital is $10,000 then the maximum loss you'll tolerate on a trade is $200. In order to ensure that your losses do not exceed this level, you'll have to set stop loss orders which will automatically close your position when the price falls below a certain level. If you've signed up with a forex rebate program, you can risk a little more since you know you'll at least get that much back as a rebate.
But when computing the actual amount of your losses, you should also consider the amount of leverage you may be using. Leverage allows you to greatly increase the amount of money you may be trading by letting you trade with borrowed money. If the amount of money in your trading account is $5,000 and your online broker gives you leverage of 100:1, you can trade up to $500,000. This greatly magnifies how much you earn when you make a winning trade but also makes your losses bigger. You will also have to take leverage into account when considering where to place your stop loss orders.
A forex rebate is a great way to manage your risk since you are assured that you will get back something from your trade, even when it is a losing one. By the end of the day, even if your trades have done poorly, you can at least expect to receive a rebate check monthly or bi-weekly. And the more you trade, the higher the rebate you can expect to get. Signing up for a forex rebate program is free when you register an account with a participating broker. But you may be able to avail of rebates even if you already have an online broker, since the rebate company will simply contact them and arrange one for you.
I am an account manager of the cash rebates website for fxcashrebates company. Forex cash rebate you can also visit Forex Brokers comparison.
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