MONEY MANAGEMENT

STRONG MONEY MANAGEMENT IS AT THE HEART OF EVERY GOOD TRADING SYSTEM

One of the quickest ways to lose money when trading is the failure to observe good money management techniques. You cannot learn too much about money management.

Here are some of the most important rules.

Never risk more than 2% of your account at any one time. NOT EVER!!!!!! Learn to compound your winnings and over time you will be able to trade more lots whilst still never risking more than 2% of your account.

Never add to a losing position or double up after a losing trade. Stay calm, focused and stick to the system.

Always use a stop-loss.

Never widen your stop-loss. Stick to the formula.

As your account balance grows, consider reducing you leverage.

Capital conservation is king. If you suffer more than 3 loses in a row (it’s rare but can happen) take a break from trading.

Never try to take revenge on the market. Losses are as much a part of trading the Forex, as are wins. Learn to accept your losses without anger or dismay.

Trading takes time, patience and discipline. Do not jump into a trade just because price has made a sudden large move. Always wait for the proper signal. Likewise do not worry about trying to capture every last cent of a price movement. Traders who become obsessed with always trying to trade the whole move usually lose money.