Forex Money Management – What is the Secret ?

Why do some forex traders fail while just a handful succeed?

Why do so many new and intermediate traders blow up their accounts (again and again?) How can you prevent blowing out yours?

It’s not the answer you likely want to hear.

The answer is not to have the best strategy. You should be well aware that there are many, many forex strategies that work well – technical strategies, trending strategies, price action strategies, scalping strategies, and even discretionary strategies and so on.

So why does one trader trade a strategy successfully and another trader trade the same exact strategy unsuccessfully?

The answer is this: The successful trader uses good money management.

I could write a lot more on the rationale for this. But I don’t want to bore you or start preaching about it.

Instead I will just tell you what to do to make sure you are using good money management. Ready?

Again, it’s probably not something you want to hear.

Rule 1 )

Never risk more than 5% of your account on any one trade. (If you want to know why, then just do a google search for the rationale. I’m not here to preach this to you or convince you. I just want to keep it simple so you can apply the guidelines and start successfully trading quickly. )

Rule 2)

Stop Loss – Set your stop loss so that you never lose more than 5% on any one trade. If you see a trade set up, but you also see that the set up requires a stop loss that will cause you to risk more than 5% on the trade – then DON’T take that trade. There will be another trade that fits your parameters soon. Take the good trade that allows you to stay within your money management parameters.

Yes, I know that applying forex money management seems to take some of the fun and excitement out of Forex.

But if you want to trade Forex as a business and for profit, you will treat it as such and always apply proper money management. Money management is the difference between the person who is “gambling in forex” verses the person who is successfully managing their forex business.

Have you discovered the forex strategies that are BEST for YOU? Visit Ann Pevey’s site http://www.fxstrategyhub.com for information on simpe forex strategies, worldwide forex news, free forex training videos and more – all about FOREX.

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