How much money should I risk per trade?
So you want to know what it takes to be a good trader.
Amazingly most traders do not have a single clue when it comes to the Money Management rules. Not surprisingly, most of them will end up losing their whole account in matter of days. I was one of them too, until I found the real cause of all my problems.
If you are in the same dilemma and struggling with your trading there may be one crucial thing that you are missing or ignoring. This is without any doubt your Money management rules. You will me stunned to see what proper Money management can do to your account.
Trading is no rocket science and the attributes to be a successful trader does not necessarily lies in the system itself. The hype surrounding forex trading has been going on for a while now attracting a lot of new traders along the way. Traders new to forex tend to get blinded by the huge amount of money they can make on the market. This one track mindedness account for their downfall as in doing so they tend to ignore their Money Management rule.
Remember that trading is based to some extent on probability. With proper Money Management rules you will be in the game long enough to may be double or triple your account in a matter of months.
So to make your life easier here are the main rules that you should follow in order to survive the forex market.
* Only risk 2% of your total account on any single day. If your system gives you 5 different trades, make sure that the 2% is distributed over the 5 trades respectively.
* Always use a trading lot that suits your account. I would highly recommend trading with less than 1/10th of your account size.
* Always use a Stop Loss when trading. Remember to place your SL at a decent swing low/high so that you do not get thrown out of the market too early by some stop-hunters.
* Always use a decent Stop Loss so that you are not thrown out of the market too quickly. I use a 15 minutes chart to access my SL when I trade off a 5 minutes time frame.
However simple those rules are, those new to trading always tend to forget about them. Applying those rules accordingly will without any doubt minimize the risk and alternatively help you stay in the game long enough to profit from the market.
Below is a sample of trading lots you should be familiar with:
1 Lot = 100.000 Units of a currency. Pip value = 10 Dollar
0.1 Lot = 10.000 Units of a currency. Pip value = 1 Dollar
0.01 Lot = 1.000 Units of a currency. Pip value = 0.1 Dollar
Risking only 2% of your total equity will result in you having to pick the right lot size to trade. - 23229
Amazingly most traders do not have a single clue when it comes to the Money Management rules. Not surprisingly, most of them will end up losing their whole account in matter of days. I was one of them too, until I found the real cause of all my problems.
If you are in the same dilemma and struggling with your trading there may be one crucial thing that you are missing or ignoring. This is without any doubt your Money management rules. You will me stunned to see what proper Money management can do to your account.
Trading is no rocket science and the attributes to be a successful trader does not necessarily lies in the system itself. The hype surrounding forex trading has been going on for a while now attracting a lot of new traders along the way. Traders new to forex tend to get blinded by the huge amount of money they can make on the market. This one track mindedness account for their downfall as in doing so they tend to ignore their Money Management rule.
Remember that trading is based to some extent on probability. With proper Money Management rules you will be in the game long enough to may be double or triple your account in a matter of months.
So to make your life easier here are the main rules that you should follow in order to survive the forex market.
* Only risk 2% of your total account on any single day. If your system gives you 5 different trades, make sure that the 2% is distributed over the 5 trades respectively.
* Always use a trading lot that suits your account. I would highly recommend trading with less than 1/10th of your account size.
* Always use a Stop Loss when trading. Remember to place your SL at a decent swing low/high so that you do not get thrown out of the market too early by some stop-hunters.
* Always use a decent Stop Loss so that you are not thrown out of the market too quickly. I use a 15 minutes chart to access my SL when I trade off a 5 minutes time frame.
However simple those rules are, those new to trading always tend to forget about them. Applying those rules accordingly will without any doubt minimize the risk and alternatively help you stay in the game long enough to profit from the market.
Below is a sample of trading lots you should be familiar with:
1 Lot = 100.000 Units of a currency. Pip value = 10 Dollar
0.1 Lot = 10.000 Units of a currency. Pip value = 1 Dollar
0.01 Lot = 1.000 Units of a currency. Pip value = 0.1 Dollar
Risking only 2% of your total equity will result in you having to pick the right lot size to trade. - 23229
About the Author:
For more information on how to become a super successful Forex trader, read my full review of Forex Mentor and Candle Charts and grab your copy of FREE Forex Video Courses.
posted by X - Men @ 6:16 AM
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