Risk reduction in the Forex market is the ultimate key to successful trading. Without proper risk management procedures in place it is virtually impossible to produce enough winning trades to come out ahead each time. The most successful Forex traders are the professionals who have a solid understanding of risk management and plan their trades around lower risk strategies.
Every trader should properly understand how to evaluate risk in the Forex market. The difference between a successful Forex trader and an unsuccessful trader is how they manage risk. Failure to understand and reduce risk is certain to lead to long term failure.
A professional trader will be able to use their knowledge of the currency trading market to help them make decisions. After evaluating the data available and applying risk management, a professional trader can use an automated trading robot to enter and exit trades when the right conditions are met. A novice trader is likely to rely solely on the algorithm inherent in their automated trading robot of choice.
A novice trader is also more likely to use an automated trading system without understanding why it makes certain trades. If success is to be achieved consistently, it is essential to understand why the trade is made. Risk management is generally not programmed into automated robots as they predominantly work on historic trend analysis.
Most Forex courses will cover the basics of trading in normal market conditions and this should help novice traders understand the decisions taken by automated solutions. However, simply using an automated trading system is not proper risk management and is unlikely to yield consistent profits in the long term.