Money Management

Money management is usually the most important “X factor” that determines the overall profit or loss of forex trading strategies. This is so frequently overlooked that it needs to be said over and over again. It is one of the key trading essentials. Money management in itself won’t give you a winning edge – you need good trade entry and exit strategies for that – but without intelligent money management practices, a winning edge will not see its full profit potential, and even risks producing a loss overall. 

There are two elements to money management that traders need to consider carefully: how much of your account to risk per trade, and how much of your account should ever be at risk whether measured in total or by some kind of sector. There are not necessarily “right” or “wrong” answers: what is best for you will depend to a large extent upon your own appetite for risk and tolerance for loss, whether temporary or permanent. Read more ...