Economy
How to Control the Risks in Trading?
Risk control is one of the dominant aspects to consider when trading. Of course, if you choose to trade with Exness MT4, the risks get reduced to a minimum. In any case, let’s cast a look at the key steps to take to minimize the risks and calculate their probability when you get into trading.
What’s Risk in Trading and Why You’d Control It Every Second
A trading risk (aka risk in trading) is presented by certain events in the forex market, to subsequently negatively affect the trader.
There may be some changes in the exchange that will ultimately lead to a loss of money.
There are strategies in the forex market that are based on risk management.
Risk at forex trading can be calculated using the following formulas. There are certain formulas and rules for determining risks, for example:
Risk per Trade = Purchase Cost — Stop
And this is the formula for calculating the risk for all trading capital, expressed as a percentage:
Risk = Expected losses in the trade / Equity x 100
This formula will help you comply with the basic rule of risk management, which allows you to risk no more than 2% of your trading capital (or portfolio) per trade.
Risk management is primarily a process of preliminary analysis of all transactions for possible risk and potential profit.
Before making a deal on the stock market (opening a position), the fundamental condition is to determine the risk arising from this.
Control over the risks, or simply risk management, largely determines the likelihood of a trader’s trading success in general, since it allows a competent approach to opening and maintaining positions under risk conditions.
Often, it is precisely the optimization of a position based on the level of risk that is acceptable for a trader that is the main criterion for successful trading.
Frequently, newbies, having no idea about risk management, overestimate the risks and lose their deposit, which often ends in frustration in trading.
Also, without working with risk management, it is extremely difficult to create a successful trading strategy.
Watch News and Stay up to Date
Being guided by fundamental analysis or simply watching news and staying up to date news plays the role of a ’fulcrum’:
- Following the publication of macroeconomic indicators
- Statements of the largest international and
- National financial organizations,
a trader is able to predict a decrease or increase in the rate of a particular currency. This is how all forex professionals work.
But even if a trader is not going to become a professional, he may well define for himself several sources of information that he will use to stay in the know.
The formula for success in the forex market is quite simple. To be in profit, it is necessary to
- Correctly interpret the information received
- Draw the correct conclusions from it, and
- React correctly by opening certain deals.
There are several basic information flows that a trader can use. The most convenient help is the financial news feed, which is equipped with all major online trading platforms.
As a rule, on this tape the specialists of the brokerage company or their partners—business news agencies post in real time all the news that are important for the Forex market.
Stay Stick to the Plan According to Budget
Sticking to the budget you planned is actually one of the fundamental parts of the control over your risks at the forex market.
There are several universal tips for applying risk management in trading that can help improve the trading efficiency of a trader who uses them correctly:
- Before starting trading, it is necessary to draw up a trading plan that describes in detail the trader’s behavior during the trading day, which helps to partially neutralize the emotional component of trading.
- Use only strong signals in trading. You shouldn’t try to trade from a reversal on every random correction.
- It is necessary to limit your losses in each trade and plan the expected profit using stop and take profit orders.
- Do not overexpose losing positions. Stop orders not only help to close a losing trade on time, they are also a kind of indicator of the correctness of the forecast. If the forecast has obviously not been confirmed, one cannot hope for a price rollback over time, otherwise one can get into the opposite trend position and lose the entire deposit.
- Do not try to trade aggressively, especially if you have no experience. It is not by chance that professional traders choose the risk threshold for a transaction at the level of 2% of the deposit—it is best to stick to it until you gain a certain experience in trading.
Each of the tips listed above is applied to the way you distribute your budget in the process of trading. Thus, planning your budget is paramount.
Take Profit-Stop Loss Points
A successful trading system consists of two parts:
- The first is the loss limitation, and
- The second one is the timely profit taking.
Sometimes traders’ strategies assume a strict ratio of the length of positions such as stop and take profit, for example, 1 to 3. Thus, a stop of 10 points will have a take profit of 30.
The ratio can be any, but you should not set too long take profits without a good reason—often the overestimation of price drivers leads to the fact that the trader does not record a solid profit, and the reversal occurs before reaching a long take.
At the same time, it should be remembered that in this case, the take profit must necessarily exceed the stop, since a rare strategy allows a trader to trade without losses, and short stops suggest that, for example, two losing trades can be compensated by one profitable one.
However, in many strategies, the exit point is determined in a different way. Signal trading is one example.
In accordance with this strategy, a trader enters a position by a signal and expects a return signal to exit. In such strategies, the ratio of possible profit and loss is quite large, since the price often passes a significant number of points before reaching the opposite signal.
However, this position has a significant disadvantage: sometimes the return signal is not received at all.
Another strategy involves placing profits near resistance levels, where the likelihood of a reversal is very high. Most often, this option is preferred by experienced traders who are able to correctly determine the levels.
Exnessgroup wishes you successful trading in 2022!
By Dipo Olowookere
About $197.71 million has been injected into the foreign exchange (FX) market by the Central Bank of Nigeria (CBN) to boost liquidity.
This intervention by the apex bank is expected to strengthen the Naira in the different segments of the forex market after coming under pressure in the past few days as a result of the new import tariffs imposed on countries, including Nigeria, by the President of the United States, Mr Donald Trump.
Business Post reports that on Friday, the Naira depreciated against the United States Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by 1.45 per cent or N22.49 to settle at N1,573.23/$1 versus Thursday’s exchange rate of N1,550.74/$1, and in the parallel market, it lost N10 to sell for N1,570/$1 compared with the N1,560/$1 it was transacted a day earlier.
To ease the pressure on the domestic currency, the central bank sold fresh $197.71 million to authorised FX traders between Thursday and Friday.
“The Central Bank of Nigeria (CBN) has noted recent movements in the foreign exchange market between April 3 and 4, 2025, reflecting broader global macroeconomic shifts currently affecting several emerging markets and developing economies.
“These developments were as a result of the recent announcement of new import tariffs by the United States government on imports from several economies, which has triggered a period of adjustment across global markets.
“Crude oil prices have also weakened – declining by over 12% to approximately $65.50 per barrel – presenting new dynamics for oil-exporting countries such as Nigeria.
“In line with its commitment to ensuring adequate liquidity and supporting orderly market functioning, the CBN facilitated market activity on Friday, April 4, 2025, with the provision of $197.71 million through sales to authorised dealers.
“This measured step aligns with the Bank’s broader objective of fostering a stable, transparent, and efficient foreign exchange market.
“The CBN continues to monitor global and domestic market conditions and remains confident in the resilience of Nigeria’s foreign exchange framework, which is designed to adjust appropriately to evolving fundamentals.
“All authorised dealers are reminded to adhere strictly to the principles outlined in the Nigeria FX Market Code and to uphold the highest standards in their dealings with clients and market counterparties,” a notice from the Director of Financial Markets Department at the CBN, Ms Omolara Omotunde Duke, said.
By Dipo Olowookere
The Debt Management Office (DMO) has revealed that the total public debt stock of Nigeria increased by 48.58 per cent or N47.32 trillion to N144.67 trillion ($94.23 billion) as of December 31, 2024, from N97.34 trillion ($108.23 billion) in the preceding year.
In a report released on Friday, the agency disclosed that the rise in the domestic and foreign debts was due to the borrowing of funds by the government in the period under review.
Business Post reports that external debt of the total debt accounted for 48.59 per cent at N70.29 trillion ($45.78 billion), while the domestic component was 51.41 per cent at N74.38 trillion ($48.45 billion).
A breakdown showed that for the total foreign borrowings, the federal government accounted for 43.49 per cent at N62.92 trillion ($40.98 billion), while the 36 states of the federation and the Federal Capital Territory (FCT) accounted for 5.10 per cent at N7.37 trillion ($4.80 billion).
As for the domestic debt, the federal government contributed 48.67 per cent at (N70.41 trillion ($45.86 billion) and the states and the FCT contributed 2.74 per cent at N3.97 trillion ($2.59 billion).
Analysis showed that in 2023, the external debt was N38.22 trillion ($42.50 billion) before rising in one year by 83.89 per cent to N70.29 trillion ($45.78 billion) in December 2024, while the local debt stood at N59.12 trillion ($65.73 billion) as of December 2023 before jumping by 25.77 per cent in 12 months to N74.38 trillion ($48.44 billion).
Since the current administration of Mr Bola Tinubu assumed office on May 29, 2023, it has sourced funds from local and external sources through treasury bills, Naira-denominated and Dollar-denominated bonds to finance its budget deficits.
However, much has been done to cut down Nigeria’s revenue-to-debt service ratio to 65 per cent from 97 per cent, according to Mr Tinubu in November 2024.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited ended Friday’s trading session lower with a marginal decline of 0.01 per cent as a result of continued market volatility.
Customs Street was down during the last trading session of the week despite bargain-hunting activities in the banking and industrial goods sectors, which closed higher by 0.51 per cent and 0.01 per cent, respectively.
Business Post reports that profit-taking in the other sectors contributed to the downfall of the local bourse yesterday, with the insurance index weakening by 3.21 per cent.
Further, the energy counter went down by 0.50 per cent, and the consumer goods space depreciated by 0.24 per cent, while the commodity industry closed flat.
At the close of business, the All-Share Index (ASI) shrank by 13.37 points to 105,511.89 points from 105,525.26 points and the market capitalisation declined by N8 billion to settle at N66.147 trillion versus Thursday’s closing value of N66.155 trillion.
A total of 348.3 million shares worth N8.1 billion exchanged hands in 11,444 deals on Friday compared with the 397.1 million shares valued at N8.7 billion traded in 13,667 deals a day earlier, implying a drop in the trading volume, value, and number of deals by 12.29 per cent, 6.90 per cent, and 16.27 per cent, respectively.
The activity log was led by UBA with the sale of 26.3 million stocks for N972.3 million, United Capital traded 25.6 million shares valued at N391.5 million, FCMB exchanged 24.2 million equities worth N211.2 million, Zenith Bank transacted 22.9 million shares valued at N1.1 billion, and Fidelity Bank traded 22.6 million stocks worth N441.7 million.
Investor sentiment remained bearish yesterday after the NGX finished with 19 price gainers and 29 price losers, showing a negative market breadth index.
Lasaco Assurance and AXA Mansard were the worst-performing equities with a decline of 10.00 per cent each to sell for N2.34, and N8.64 apiece, May and Baker decreased by 8.72 per cent to N7.85, Guinea Insurance crashed by 8.70 per cent to 63 Kobo, and FTN Cocoa lost 6.43 per cent to end at N1.60.
However, Learn Africa and Livestock Feeds closed as the best-performing stocks after they gained 10.00 per cent each to quote at N3.30, and N7.92, respectively, VFD Group soared by 9.83 per cent to N57.00, Union Dicon expanded by 9.43 per cent to N5.80, and NGX Group rose by 8.17 per cent to N32.45.
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