::Money Management Development::

Money Management Development:

For getting success from Forex Industry every trader should focus on money management as well as risk management. This is oldest and most important advice for all traders. This is fundamentally the most important element to master in order to achieve consistent success and profitability as a trader but is also one of the most neglected aspects of trading for newcomers. Without proper money management procedure every effort can be fruitless.

Why money management is important?  

You may ask question that, why money management is important? Money management is essential in Forex trading for two reasons. The first of these is that it needs to be employed in order to be consistent with the potential profits that can be achieved and, secondly, money management will allow a trader to continue trading even during periods of poor performance. If trader understand money management properly then they can use potential take profit as well as stop loss that help trader to trade even in an adverse situation. The placement of these stop-losses should be relative to the expected gains, and ideally with a risk-to-reward ratio of no greater than 1:1. Managing risk relative to expected gains is an effective way to ensure that the risk taken on each trade is no greater than the potential profit. This should allow a trading strategy with an ‘edge’ to outperform the market if discipline is maintained and stop-losses are never extended beyond their pre-determined level.

Here I try to mention some important key point that should follow every trader: ( Money Management Tips)

1.Understand your risk level before entering any new trader. It will work as a silent money management weapon. Never focus only profit and number of pips,

2. Don't forget your risk level meaning, that is how much money you are going to lose per trade.

3. Focus on low loss and high profit ratio. And decorate your money management procedure by understanding this.

4. Use trailing stop if you are use to or place S/L at breakeven when you're in profit.

5. Use S/L of your every trade, and focus on support and resistance during that.

6. New trader can take maximum 1-2% risk per trade.

7. Do not increase lot size in start , always increase volume when your deposit is double. Example: If your deposit is 300$ you should start trade with one point = 0.01

8. Focus on high probability price action trade set up.

9. Never use risk reward ratio 1:1 , 2:1, 3:1 and so on. Means don't trade on low profit and high loss otherwise it will emptied your account in few days .

10. No need to make any trade when you feel any confusion, decentralize your profit time to time.

A common problem with risk management:

Risk management involves a large degree of discipline and preventing the temptation to move stops or ‘average down’ a position. One of the most destructive practices is to try to reduce the losses incurred on a failing trade by exposing an account to even further losses, or to become dogmatic and continue buying or selling in to the trade in order to lower the average purchase price. The acceptance that trades cannot always be profitable is essential to exercising effective risk management. Limiting the damage during these negative trades is more important for the health of an account than the profits of the winning trades.

Thank You

Money Management development