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.
In my early days of trading I did a common mistake that most new traders tend to be a prey of, which was ignoring my Money management rules. This one mistake was the cause of my failure in the currency market.
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.
Money management is in other words the back bone of your trading. Having well thought rules and sticking to them will help you stay in the FX arena for longer. Bear in mind that trading is to some extent a game of probability, a reason why to have a good money management rule in place.
To make things easier, I have outlined those critical Money Management rules below.
* Risk only 2% of your total account size per day
* Trade with less than 1/10th of your account size. This is a critical rule for staying in the forex game long enough to succeed.
* 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.
The table below will help you have a clearer idea of lots sizes:
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. - 31876
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.
In my early days of trading I did a common mistake that most new traders tend to be a prey of, which was ignoring my Money management rules. This one mistake was the cause of my failure in the currency market.
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.
Money management is in other words the back bone of your trading. Having well thought rules and sticking to them will help you stay in the FX arena for longer. Bear in mind that trading is to some extent a game of probability, a reason why to have a good money management rule in place.
To make things easier, I have outlined those critical Money Management rules below.
* Risk only 2% of your total account size per day
* Trade with less than 1/10th of your account size. This is a critical rule for staying in the forex game long enough to succeed.
* 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.
The table below will help you have a clearer idea of lots sizes:
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. - 31876
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.
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