up losing over 60 of his initial investment. Risk only small percentage of a total account. There are several rules of good money management:. Trades, account balance, risking 10 of a total account per trade 1, start over 60 of the account has been lost Apparently, there is a big difference between risking 2 and 10 of the account balance per trade. Why is it so important? Trade safe building stable gains. Those who also have deep pockets can additionally sustain larger losses and continue trading under unfavorable conditions, because they are financially able. Copyright m All Rights Reserved Forex trading is a high risk investment. In the worst case scenario with ten losing trades in a row the trading account will suffer this much: Trades, account balance, risking 2 of total account per trade 1, start of the account has been lost.
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A trader who has made 10 trades risking only 2, under the worst conditions would lose only 17 of his initial investment. Forex brokers will rarely teach traders good money management skills, though almost all brokers will offer some sort of education, therefore it's important to also learn on your own. All materials are published for educational purposes only. Let's take a look at the example that shows a difference between risking a small percentage of capital and risking a larger one. Survival is the first task, after which comes making the money. For an ordinary trader, the skills of surviving become a vital "must know" requirement to keep own Forex trading accounts "alive" and be able to make profits on top.