Risk Management Tools

Both new and experienced traders make good and bad trades over a long period of time. The difference between them is that the more experienced trader has a grasp of the importance of risk management as an integral part of a successful Forex trading strategy. Proper risk management can maximize the positive and minimize the negative aspects of the regular ups and downs of trading. In addition to basic limit and stop orders, CMS Forex offers a range of risk management tools that can give you an edge over the market.

Limit and stop orders*
When placing a market order, many experienced traders already know the levels at which they will want to exit the trade. The 24 hour nature of the Forex market makes it difficult for you as a trader to make timely trading decisions. This is even more important since large market moves may happen while you are away. VT Trader™ makes it very easy to place and change limit and stop orders that automatically close out open positions. With these basic tools CMS Forex gives you the ability to manage your positions while you are not attending to the market.

Hedging
Hedging is a very useful tool for those traders that know how to use it properly. This risk management tool can be used to ride out transitional periods between trending markets or place short term trades against an open position intended for a long term strategy. Hedging an open position involves placing a trade in the opposite direction. Normally, the opposing trades cancel each other out, but with our hedging feature, both trades remain active. This new position does not require extra margin and can be closed at any time.

Trader's Guardian
A recent addition to VT Trader™, Trader's Guardian provides a number of tools to help analyze and assess your risk exposure in the market. The Margin Use Level(s) feature displays your used and usable account margin for each accounts on easy-to-decipher bar graphs. To help prevent you from falling below your usable margin, a Warning Level is displayed at all times. Keep track of your exposure in opened positions as well as your exposure in different currencies, with the Instruments Exposure and Currency Portfolio tools.

Trailing stop trading system*
This much-requested feature may be an invaluable way to simplify your trading and help protect your positions. The trailing stop works like a regular stop order that moves up or down if your original position is moving in a favorable direction, while not moving if your position is moving in an unfavorable direction. If you have a long position, for example, and set up a trailing stop, it will move up as the position's price rises. When the price begins to fall, the trailing stop stays in place until it is triggered. It is up to you, the trader, to set the number of pips the stop will trail the market price. The trailing stop trading system helps clients lock in potential profits while controlling for possible market reversals.

Trader's Range
The Trader's Range feature is a handy way to minimize the costs associated with missing an entry or exit on a position, during an extremely fast moving market. Trader’s Range lets a trader choose a certain amount of pips in either direction from the current market price that he or she is willing to accept. Utilizing Trader's Range takes the place of entering an order, getting requoted and then having to manually accept a new price. Proper use of Trader’s Range eliminates the hassle of approving a requote when trying to enter orders and helps your orders get filled even in volatile markets.

Bundled Entry Orders*
Bundled entry orders allow a user to set limits and stops for the pending position when creating a new entry order. This ensures that even if your order is executed while you are away from the computer, the order is completely covered by associated limits and stops. If your position reaches your desired profit target, the limit order will close your trade with a profit. If the trade goes against you, the stop order will close out your position at your preset level, limiting your losses. Once a bundled Entry order is placed it does not require any direct supervision, as its execution and the levels at which it will close have already been predefined by the trader.

P&L Based Order Entry*
Since many traders think in dollars and not in pips, CMS Forex allows its clients to place orders based on monetary values rather than currency prices. Our VT Trader™ software allows you to set stop and limit orders based on your monetary profit target and maximum acceptable loss without the need to set specific target prices. For example, just tell the system that the maximum loss you are ready to incur on this position is $200 and your profit target is $500, click OK and your limit and stop orders are set.

* CMS attempts to honor the price of all orders for positions up to 10 lots, under normal market conditions. For large positions, or during extraordinarily volatile markets conditions, it may become impossible to execute the order at the intended price, and the next available price may be used to fill the market order.

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