When trading Forex, it is helpful to consult the Forex forums and to be in touch with other traders to keep up with Market Sentiment.A Forex trader should always follow the news and market techniques that other investors use to have a profitable trading strategy. The Giga FX Review solves all up for the platform choice.
Forex Money Management Technique – Optimistic But Not Greedy
Avoid being greedy in Trading!Greed can push you to make bad trading decisions. Trading is not always winning and making profitable trades all the time.
It’s about opening stock market orders at the right time and closing them at the right time. One mistake not to make is to want to make a profit too fast for fear of losing out. Good risk management is always associated with great discipline and the existence of a Forex strategy and trading plan.
How to use Swing Trading and Forex Money Management
It is easy to learn Forex trading online and learn how to manage money with the intention of using it in your trading strategy.
- However, many traders fail to put all these principles into practice. That’s exactly where you find the difference between winning traders and a losing trader!
- If we look at some financial investment studies, we can easily see the difference between a successful investor and losing investors, as well as beginners struggling and outstanding professionals: it all comes down to rigor.
Money management requires a solid organization. For example, you can write several Forex money management rules in a post-it:
Know the reason why I open a certain trading position (technical and / or fundamental factors).
I have to put a Forex Stop Loss
- My maximum loss in a position should not exceed 5% of my trading capital.
- My risk / reward ratio should be equal to or greater than 1: 2 (or 1: 1, 1: 3, 1: 4 depending on your trading style)
- My accumulated losses on this day (or week) should not exceed 20% of my capital. Otherwise, I must stop trading for today.
- This capital management strategy can therefore prevent you from trading too much and limit your exposure to Forex trading risks.
It will allow you to define how much to risk and what is the maximum loss in a Forex trade.
Money Management Forex Limitations
In money management rules we often find the concept of maximum loss in terms of percentage of available capital.