Money Management most vital thing of Forex Trading
Money Management or cash Management and leverage, stop losses and targets all are be familiar with those people who are already start Forex trading. Their are many indicator for Money Management but this is it where you drop up your own property in a deep sea.So be aware about your Forex Trading Money Management. Remember return on investment is so hard things in the world. First learn money management definition than go forward.
This is one of the most important and most overlooked parts of Forex trading. Many traders take huge risks with their capital in the hope that they will “get rich quickly” or recover previous losses with one good trade. But we would like to suggest some simple guidelines for managing your trading account with the Expert Forex Systems, which will help you to reduce risk and maximize returns. Be careful about your cash Management and Save Money. Because managing people doesn’t loss money.
Never leverage more than 5:1 means that for every dollar in your account, you should not trade more than 5 dollars per trade positions. For example, if your account size is $500, you should trade no more than $2500 per position. This is 2.5 mini lots (a mini lot is worth $10,00) For example, with a standard account ($100k lot size), you should have at least $20k in your account to trade one standard lot of $100k. Actually we prefer to leverage even lower than 5:1 with 1:1 – 2:1 being optimal position.
Never risk more than 2% of your account on 1 trade, this is easily calculated. If the trade you want to enter requires a 40 pip stop loss for example, the risk to your account if stopped out is 40 pips x leverage/100%. In this case, if your leverage is 5:1 then the risk would be 40×5/100 = 2%. If the stop loss is higher, the leverage would have to be reduced.
Always aim for a 2:1 reward/risk ratio in your trades means If you are prepared to risk say 40 pips on a trade, ensure that the potential target for the trade is at least 80 pips. If you are prepared to risk 50 pips, make sure you have a possible target of 100 pips, and so on. Try to always aim for twice as much as you risk. The only exception to this rule is found in the Power Break method, and this will be clarified in that section. Think about it.
If you stick to these simple rules, you should be able to weather the storms and have a long lasting and relatively stress free Forex career! Remember its not game its a calculation and emotion control method. If you do that you Gain or if you not Than go for suffer. Good luck and enjoy!