Eight Tips of Money Management Forex

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Best Eight Forex Money Management Tips You Need
To Know

• Managing forex money is important to increase
  profits and reduces losses which can arise if not
  monitored. In the highly fluctuating forex
  market, the movement of one currency against the
  other creates opportunities which traders take
  advantage of. Many a times, the risks are
  overlooked by the amateur traders and they land
  up losing all their capital. The problem deepens
  when the invested capital is used as margin and
  larger sums of money is traded in the currency
  market looking at possible profits without
  analyzing the pitfalls. For a beginner in the
  currency market, its important to understand the
  basics an d stick to them to avoid such
  scenarios.
• Some of the key points to know while managing
  forex money are
• Wait for right opportunity and do not chase the
  market often the new traders in the forex
  market, are excited seeing the fluctuation in the
  market and tend to trade more than required. It
  may leave one with a bitter experience and heavy
  losses. Trading is not meant to be done every
  day. Rather studying the market to determine the
  direction gives clarity. Thus one should not
  chase the market for opportunities but study the
  trend and then invest or trade.
• Determine risk per trade the amount one is
  ready to risk in a single trade is the risk per
  trade. One should not go more than two-three
  percent of the account on one trade in order to
  have a cushion when the markets go against the
  investment.

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• Losses should be booked before they accumulate
  not all market calls will prove to be fruitful
  and lead to profit. Not often do we hear of all
  trading calls being right. To be on the safer
  side, one should cut the losses short and the
  profit making investments can be continued.
• Be cautious while leveraging while leveraging
  is a good tool for increasing your profits
  manifolds, it also equally enhances the chances
  multiplying your losses. Every time a trade is
  entered into, before looking at the possible
  profits, one must understand the losses which may
  have to be booked.
• Always use stop loss orders in order to improve
  the profitability while managing the risk, the
  market order ideally should be with stop losses.
• Trailing stops to lock-in profits to maximize
  the benefit of profits, a combination of
  different stop loss orders should be used. A
  trailing stop loss is used to book profits when
  the market trend is strong.
• Greed and fear problem with trading are the
  biggest emotions - greed and fear which take the
  front seat and drive the trader to take hasty
  decisions. These emotions should not get the
  trader to take any decisions and thus a trader
  should not get afflicted towards any currency
  pair(s). Unrealistic profit targets (read greed)
  dont encourage profit booking at the right time
  which is similar to fear when the profits are
  booked too early in the trade.
• Appropriate position sizing the quantum of
  trading is equally important as in the risk per
  trade. The position sizing defines the potential
  profit for a trader.

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