Why you can’t survive the first few
months of trading?
The problem is that, as hard as it is to learn how to trade the market, it is even
harder for most people to manage their account. This is mainly due to
inexperience and wrong, emotional decisions. I can’t help with the emotional side, but what I can help you with is gaining experience in
converting a winning trade system or signals into money in the bank.
In trading, It’s all about money management.
The sad fact is that most traders fail to make money, or even survive the first few months of trading due to two factors:
1. A poor trading system.
2. Poor money management.
those two parts are very important and I want to show you how you can trade your money in the right way.
How to Manage risks in your trades ?
Trading involves risk. Every trade we take has a chance of being a winner and a chance of being a loser. There is simply nothing that will ever change that…
No-one knows where the market will go next with certainty.
What we can do is to develop systems which give us an edge of better than
50:50, and the systems we use win about 60–75% of the time..
This does not make the losing trades bad trades, but it simply means that the trades fell into the “good, but losing” trades.
When a trade goes against us, the best thing to do is to close the trade for a
relatively small loss and to wait for the next opportunity.
Many non professional traders tend to hold onto losing trades, hoping the market will go in thier predections, or even add another losing
positions…Always control your emotions !
Here are some powerful risk management tips in forex trading :
1- Use a stop loss.
2- Use a take profit to secure your profits.
3- Do not risk more than you can afford to lose.
4- Limit your use of leverage.
5- Use a Forex Risk Management Calculator
Conclusion :
Understanding the basic money management principles and using
sound techniques for limiting risk in a forex trading account can make
the difference between being consistently profitable and having your
forex broker terminate your trading positions when your losses exceed
margin requirements.
Basically, forex trading can be a serious long term business for a good
money manager or a temporary whirlwind that can completely
consume a person’s risk capital quite quickly for those who do not
manage their money wisely. Maintaining a realistic handle on profits
and losses by using established money management principles, allows
a forex trader to be relatively impartial and not let their emotional
reactions sabotage their trading efforts.
