Forex: Money Management Principles

Trade with sufficient capital

One of the worst mistake you can make the Forex trader is trying to trade without sufficient capital.

Forex Trading Pip

The trader with limited capital will not only be concerned about a trader, always looking to minimize losses beyond the point of trading realistic, but it is also often be taken out of the trading game before any sense of success trading the method (n can be achieved) or samples.

Exercise Discipline

Discipline is probably one of thetoo many words in the field of forex trading. But despite the cliches, uses the discipline to be the most important teacher behavior for a profitable trader. Discipline is the ability to plan your work and your work surface.

And 'the ability to give your business time to develop without hastily out of the market between them, just because you are exposed to risk. Discipline is the ability to continue the methods and models, even after tradeWho have suffered losses. Do your best to the degree of discipline necessary to cultivate to become a world-class traders.

The use of risk-return ratios

The figure below shows the possible risk-win and the conditions necessary to break even in a trading system to reward.

Risk-to-Reward Ratio (in pips) and win percentage Needed to Break Even (%)

40/20 (2-1) = 67%, 40/40 (1-1) = 50%, 40/60 (1-1.5) = 40%

40/80 (1-2) = 33.5%;

60/20 (3-1) =75%

60/60 (1-1) = 50%

60/90 (1-1.5) = 40%

60/120 (1-2) = 33.5%

Important Note

Do not risk more pips on a trade, then plan to do. It makes no sense to risk 100 pips to make only 10. Why? See example below.

Profit taking level (pips): 10

Stop used or seeds at risk: 100

You win 10 times makes 100 pips profit.
You lose only once and must return allWin!

This type of trade that makes sense, and you are guaranteed to lose in the long run!

Forex: Money Management Principles

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