Wednesday, 28 March 2018
6 Forex Money Management Tips
Labels:
motivation
One can never
emphasize enough the importance of money management skills. No matter if we are
talking about taking care of your personal finances or choosing the right size
for a trade - money management will always guarantee a better, more rational
decision.
Below, FortFS
experts put together find six tips to improve your money management skills in
Forex:
1. Your Risk
Capital As A %
Taking the right
amount of risk when trading will already put you a step ahead of others. Start
by limiting your positions’ size in 2% of your total investment capital.
2. Leave
Aggressiveness For The Gym
Don’t be mistaken.
You can act like a bull or a bear on the street, but you should trade as rocket
scientist. The point is simple: being aggressive makes you susceptible to
mistakes and therefore, exposes you to higher risks. Try keeping your nerves
down and a cold head. That’s the mindset you should embrace from now on.
Adjust the position
size to the volatility level of the pair you are trading. For instance, a more
volatile pair will demand smaller positions to keep risks under control.
3. Don’t Lie To
Yourself
Aggressiveness is a
big issue in this industry. Why do you think traders are aggressive? Especially
young ones. Well, several studies have shown than the answer relies on poor
goal setting. Many traders come into Forex with the idea of becoming
millionaires from day to night. Not gonna happen, not to mention it if you are
starting with $50 on your account.
Try it out.
Understand how much you can generate in a single day of trading. Multiple it by
20 working sessions and be aware of changes. You’ll have a monthly goal.
4. Cut The Losses
No mystery here.
The basic rule: let gains run, cut the losses. If you were wrong, don’t wait
for miracles. Jesus is simply not coming. Better close the position, assimilate
your mistake, understand it, embrace it and move forward with a renewed Forex
soul (or balance).
5. Shit Happens
Never better put.
Alright, so… the market turned around suddenly and your positions were executed
at stop losss levels. Feeling bad? Think of the ones who haven’t set SL orders.
Better…? We can work as hard as possible but the market lives on its own and
you should understand that. Be ready for changes and always cover yourself with
SL. If things go south, at least you’ll not blow your account in full.
6. Envisage Exit
Points Before Entering a Position
In order to keep it
pragmatic. When setting an entering position, think of a possible exit level
target level too. That will help you keep your trading systematic and a bit
less risky. Remember, scientist, not boxer.
Hope these tips
were helpful.
Keep it up. Good
trading!
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