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Traders usually don’t take into consideration the risk management while trading. But you should keep in mind that profitable day trading is impossible without proper risk management. Traders must know how to manage their traders, and the associated risks perfectly. This will help you in making trade profitable in the long term.

If you want to improve your risk management skills, here are some effective tips that you can follow.

Think About Profit And Loss First

Whenever you see a signal to place a trade, first decide where you’ll take the profit and where you’ll stop the loss. Also, measure the risk to reward ratio before placing any trades. If the trade isn’t matching any of your requirements, then skip that trade and wait for the right one to arrive. If you’re a beginner, never try to increase the take profit margin and decrease the stop loss margin to gain a high risk to reward ratio.

This is one of the biggest mistakes that many new day traders make, and end up losing most of their investment.

Avoid Using Fixed Stop Distances

In many inefficient trading strategies, trainers are suggesting the beginners to use fixed points for stopping loss in trades and taking profits from different financial instruments that you’ve invested in. However, this is a horrible generalization, and doesn’t match with any direction of flow of the financial instruments, and their values.

Price fluctuations and risks change everyday in day trading, and you’ll have to study all the indicators thoroughly before placing any trades. For example; when the market is volatile, you can increase both your take profit and stop loss margins to stop premature closure of the trade, and to maximize your profits. For more information on day trading, you can visit