Money management is a way traders control their money flow: in or out of pockets. it's simply the knowledge and skills on managing a personal Forex account.
Rules of good money management:
1. Risk only small percentage of total account
Why is it so important? The main idea of the whole trading process is to survive! Survival first, and only then making money on top. Big traders first of all are skillful survivors. In addition, they usually have deep pockets, which means that under unfavorable conditions they are financially able to sustain big losses and continue trading. For the ordinary traders, the majority of us, the skills of surviving become a vital "must know" platform to keep trading accounts alive and, of course, to make good stable profits.
2. Rebuilding of a shrinking account is harder that it may seem to be
There is a challenge: try on your demo account to rise up 300% or at least 100% of your original account trading as it would be real money. Will that be easy?
3. Calculate risk / reward ratio before entering a trade
When chances to win in a trade are smaller than potential losses, don't trade! Remember staying aside is a position.
4. Learn to use protective stops
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Rules of good money management:
1. Risk only small percentage of total account
Why is it so important? The main idea of the whole trading process is to survive! Survival first, and only then making money on top. Big traders first of all are skillful survivors. In addition, they usually have deep pockets, which means that under unfavorable conditions they are financially able to sustain big losses and continue trading. For the ordinary traders, the majority of us, the skills of surviving become a vital "must know" platform to keep trading accounts alive and, of course, to make good stable profits.
2. Rebuilding of a shrinking account is harder that it may seem to be
There is a challenge: try on your demo account to rise up 300% or at least 100% of your original account trading as it would be real money. Will that be easy?
3. Calculate risk / reward ratio before entering a trade
When chances to win in a trade are smaller than potential losses, don't trade! Remember staying aside is a position.
4. Learn to use protective stops
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