Forex Money Management

Posted by admin 06/02/2014 Comments are off 724 views

forex

Lot’s of new forex traders focus more on the entries and the exits rather than what happens in between, once you put the trade on until you close the trade a lot can happen and a lot can be done.

Steady Forex Profit Taking.

The key to making consistent profits in forex is to keep taking profits regularly, you never really know what the market will do, so all the time you are in profit in the market you want to be cashing some of that in. When you are in a trade there is always the possibility that it will go back to the price you initially entered at, in fact if you left a trade on long enough it’s almost guaranteed with few exceptions to come back to that price at some point in time. That is why it is so effective to take some profit after you get into the same amount of profit as your original stop loss was, if you take half off and leave your stop loss in place you have a risk free trade on, the worst that will happen is that it hits your stop loss and you lose the profit you’ve just made.

Put As Much Effort Into Forex Trade Management As You Would An Entry.

Lots of traders once they’ve placed a trade, tend to step away from it and accept that whatever will be will be, but you really shouldn’t do this, why should you take less of an interest in the market now you actually have money riding on it. You don’t need to be glued to the screen the whole time your trade is on, quite the opposite, your chosen timeframe for trading shouldn’t require you to be glued to the screen. On the shorter timeframes you will find yourself over analysing and over managing your trades, and this will have a negative impact on your trades, and you are likely to be a high frequency losing forex trader. You will be putting too much effort into everything and getting nowhere, take a step back, look at the longer timeframes, then you will find that you are focusing on your trade and money management as well as your entries and not getting stressed about your trading. Trading too high a leverage is a big mistake that traders make, they think I’m using reasonable leverage and in mathematical terms it might well be, but in psychological terms it might still be too much, anything more than 1% will have a substantial impact on your trading mentality. I’m not saying you couldn’t trade 2% risk on each trade but it is likely you will be running a higher risk of letting your mentality rule your trade.

 

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