Money Management Strategies in Forex

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Money Management Strategies in Forex
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Content At a Glance

• Introduction
• Money Management Strategies

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Introduction
Most traders do not practice proper money
management because we have all heard the
statistic that something like 90 of traders
fail to make money over the long-run in
the Forex market.
Forex trading is inherently risky there is real
and present danger that you could lose money on
any given. So practicing proper Forex money
management is essential to long-term trading
success.
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Money Management Strategies

• Trade only with true risk capital
• Trading with non-affordable money is like curving
  the tombstone of forex carrier
• Many traders start trading with the money of
  other life necessities
• But trading with the money that is not engaged
  with any issue is fare
• Otherwise you will become an emotional trader
• because of pressure

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Contd

• Demo trade before risking real money
• Without knowing the strategies there is less
  chance to win in any field
• You will be failure in forex if you start with
  real money before knowing the strategies
• Better start with demon account, apply your idea
  figure out a proper plan
• Then trade with real money according those plan

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Contd

• Consider yourself a risk manager rather than a
  trader

As a trader, your main goal needs to be to
effectively and efficiently manage your risk on
every trade and to begin viewing and weighing
each trade setup in terms of possible risk to
possible reward.
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Contd

• Always define your risk before entering a trade
• You Should have a sound sleep with the money risk
• Many traders view the market as an endless supply
  of money
• But professional forex trader view the market in
  terms of risk

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Contd

• Understanding position size before going live
• To correctly implement position sizing-
• Pre-define the amount of money you are truly OK
  with losing on one trade
• Wait patiently for a high probability trade
  signal like a price action setup
• Then need to start thinking about risk, not
• reward just yet

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Contd

• Most traders do the opposite-
• Try to figure out how much money they can squeeze
  out of a given trade setup before paying any
  attention to stop placement or risk
• Stop placement and risk is the next thing you
  need to think about after finding a high
  probability trade setup

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Contd

This is where position sizing comes in you need
to find the safest place for your stop loss so
that it gives the trade the best chance of
working out, after you determine this level you
must then calculate the correct position size, or
number of lots you will trade so that your
previously pre-defined risk amount is not
increased or decreased. 
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Contd

• Learn to take profits at logical intervals as
  they are available
• If you take 12 risk reward trades, you can lose
  on over half of your trades and still make money
• If you take 13 or 14 rewards you can win on far
  less than 50 of your trades and still make
  money.
• Many traders fail to take profits at logical
  intervals like this

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Contd

You cant feel rushed to make a ton of money in
the market if you are starting with a relatively
small trading account.
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