| What % Of My Total Account Should I Risk Per Trade? |
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| Written by Ash Naeck |
| Sunday, 08 November 2009 21:12 |
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Do you want to know the simple steps that all professional Forex Traders abide too, then keep reading.
Do you want to know the simple steps that all professional Forex Traders abide too, then keep reading. Amazingly most traders do not have a single clue when it comes to the Money Management rules. Not surprisingly, most of them will end up losing their whole account in matter of days. I was one of them too, until I found the real cause of all my problems. I knew that trading was no rocket science but still I could not make a decent profit on the market. This is until I stumble upon one crucial part of my trading that I was always neglecting, my Money management rules. Once I started following those simple rules that are outlined below, my trading took a dramatic change. Trading is no rocket science and the attributes to be a successful trader does not necessarily lies in the system itself. The hype surrounding forex trading has been going on for a while now attracting a lot of new traders along the way. Traders new to forex tend to get blinded by the huge amount of money they can make on the market. This one track mindedness account for their downfall as in doing so they tend to ignore their Money Management rule. Trading is above all a game of probability and with the right information and system you can stack the odds on your favor. Applying proper Money Management rule to your trading will undoubtedly increase the chance of surviving this tough world of trading. So to make your life easier here are the main rules that you should follow in order to survive the forex market. * Risk only 1-2% of your total account per day. (You will thank me for that) * Always use a trading lot that suits your account. I would highly recommend trading with less than 1/10th of your account size. * Always use a Stop Loss when trading. Remember to place your SL at a decent swing low/high so that you do not get thrown out of the market too early by some stop-hunters. * Take partial profit each time you reach a certain level of major resistance/support and bring your Stop Loss to Break-Even. As you may see those are very simple rules, but due to the simplicity of this technique, it tends to be over-looked. Applying those rules to your trading may dramatically change the way you think and trade the market. The table below will help you have a clearer idea of lots sizes: 1 Lot = 100.000 Units of a currency. Pip value = 10 Dollar 0.1 Lot = 10.000 Units of a currency. Pip value = 1 Dollar 0.01 Lot = 1.000 Units of a currency. Pip value = 0.1 Dollar Risking only 2% of your total equity will result in you having to pick the right lot size to trade. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. For more information on how to become a super successful Forex trader, read my full review of Forex Mentor and Candle Charts and grab your copy of FREE Forex Video Courses. |