How much money should I risk per trade?
Do you want to know the simple steps that all professional Forex Traders abide too, then keep reading.
Surprisingly most new traders jump on the forex market with no specific plan thinking that they will make thousands of Dollars in record time. You see trading is not that easy of a job. Yes it is a job, not a leisurely activity but simply a job which needs to have some strategic plan in place so that it may be performed properly.
In my early days of trading I did a common mistake that most new traders tend to be a prey of, which was ignoring my Money management rules. This one mistake was the cause of my failure in the currency market.
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.
Money management is in other words the back bone of your trading. Having well thought rules and sticking to them will help you stay in the FX arena for longer. Bear in mind that trading is to some extent a game of probability, a reason why to have a good money management rule in place.
To make things easier, I have outlined those critical Money Management rules below.
* Only risk 2% of your total account on any single day. If your system gives you 5 different trades, make sure that the 2% is distributed over the 5 trades respectively.
* Your trading size should be less than 1/10th of your account size.
* Always use a stop loss that is decent enough so as not to get thrown out of the market to later see price heading in the initial direction you picked.
* Take partial profit when you've reached an area of support/resistance and bring your Stop Loss to Break-Even. (This has saved me many losing trades).
Those rules are ridiculously simple but heavily ignored by many new comers in the trading world. Following the critical points stated above will greatly help you in your trading. This will undoubtedly keep you in the game long enough to be profitable.
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
Taking into consideration that you are risking only 2% of your total trading account, your next step will be to pick the right lot size to suit your risk level. - 23204
Surprisingly most new traders jump on the forex market with no specific plan thinking that they will make thousands of Dollars in record time. You see trading is not that easy of a job. Yes it is a job, not a leisurely activity but simply a job which needs to have some strategic plan in place so that it may be performed properly.
In my early days of trading I did a common mistake that most new traders tend to be a prey of, which was ignoring my Money management rules. This one mistake was the cause of my failure in the currency market.
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.
Money management is in other words the back bone of your trading. Having well thought rules and sticking to them will help you stay in the FX arena for longer. Bear in mind that trading is to some extent a game of probability, a reason why to have a good money management rule in place.
To make things easier, I have outlined those critical Money Management rules below.
* Only risk 2% of your total account on any single day. If your system gives you 5 different trades, make sure that the 2% is distributed over the 5 trades respectively.
* Your trading size should be less than 1/10th of your account size.
* Always use a stop loss that is decent enough so as not to get thrown out of the market to later see price heading in the initial direction you picked.
* Take partial profit when you've reached an area of support/resistance and bring your Stop Loss to Break-Even. (This has saved me many losing trades).
Those rules are ridiculously simple but heavily ignored by many new comers in the trading world. Following the critical points stated above will greatly help you in your trading. This will undoubtedly keep you in the game long enough to be profitable.
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
Taking into consideration that you are risking only 2% of your total trading account, your next step will be to pick the right lot size to suit your risk level. - 23204
About the Author:
For more information on how to become a super successful Forex trader, read my full review of Top Dog Trading and Candle Charts and grab your copy of FREE Forex Video Courses.
posted by X - Men @ 3:44 AM
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