Saturday May 7, 2011 21:45
Money Management Strategy And Forex
Posted by Pro Trader as Intro to Forex
Well, it is a very sad and not good fact that ninety per cent of all beginning forex traders actually blow up their forex accounts only in their first month of trading. However, there is one amazing thing: that obviously happens regardless of whether they really have a very profitable trading system or not. For sure, there is much more to making money in foreign currency trading, than having a very profitable forex trading system.
But what exactly so many beginning forex traders do not understand is that when you are only getting started in foreign exchange, having a good and proper money management strategy is much more important and essential, than having one trading system that has a great returns. And due to this article, you are going to know how particularly to apply only the best money management strategies for safe and very consistent returns from your trading system.
But now let’s talk about the best money management strategy for you. And thus even if you actually have the worst trading system in this world, you are not going to blow up your forex account when you really have a good and proper money management strategy. But from the other side, without a good and right money management strategy, you could possibly have the best trading system in this world and it would not even matter at all. Well, that’s how important and essential money management in foreign currency actually is.
Of course, before we actually get into ins and outs of money management if foreign exchange, it is necessary for you to understand how essential and vital it is to really protect your money and investment when you are trading at the forex market. But unluckily, so many beginning forex traders definitely start out with just a little capital.
Thus they obviously try to turn only one thousand into one hundred thousands of dollars by being very and very aggressive and also risking a big part of their capital on their actual trades. In addition, when the inevitable losers clearly come along their forex account and take a big hit. Well, it is just like taking several steps forwards and more steps backwards each day: unsustainable and also frustrating in the long run.
And finally, you may believe it or not, but the best money management strategy is definitely to dial your actual risk per one trade way down to nearly two or four per cent of your current capital. For sure, that is the best cutting edge money management strategy which all the hedge funds and also big banks certainly apply for all their forex traders. Of course, I highly recommend you to apply it as well.
Before you make up your mind to make a forex investment or start forex trading yourself, better find a nice forex book and read more about forex market – this will save you from tons of troubles and traps.