Eight Tips of Money Management Forex - PowerPoint PPT Presentation

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Eight Tips of Money Management Forex


One of the significant aspects of money management forex is to balance two things- restricting worst case scenario losses to an acceptable level and maximise the potential profits. In order to get an adequate strategy for forex money management, it is important to apply risk management strategies that helps avoid risks involved in forex trading. Visit: – PowerPoint PPT presentation

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Title: Eight Tips of Money Management Forex

Best Eight Forex Money Management Tips You Need
To Know
  • Managing forex money is important to increase
    profits and reduces losses which can arise if not
    monitored. In the highly fluctuating forex
    market, the movement of one currency against the
    other creates opportunities which traders take
    advantage of. Many a times, the risks are
    overlooked by the amateur traders and they land
    up losing all their capital. The problem deepens
    when the invested capital is used as margin and
    larger sums of money is traded in the currency
    market looking at possible profits without
    analyzing the pitfalls. For a beginner in the
    currency market, its important to understand the
    basics an d stick to them to avoid such
  • Some of the key points to know while managing
    forex money are
  • Wait for right opportunity and do not chase the
    market often the new traders in the forex
    market, are excited seeing the fluctuation in the
    market and tend to trade more than required. It
    may leave one with a bitter experience and heavy
    losses. Trading is not meant to be done every
    day. Rather studying the market to determine the
    direction gives clarity. Thus one should not
    chase the market for opportunities but study the
    trend and then invest or trade.
  • Determine risk per trade the amount one is
    ready to risk in a single trade is the risk per
    trade. One should not go more than two-three
    percent of the account on one trade in order to
    have a cushion when the markets go against the

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  • Losses should be booked before they accumulate
    not all market calls will prove to be fruitful
    and lead to profit. Not often do we hear of all
    trading calls being right. To be on the safer
    side, one should cut the losses short and the
    profit making investments can be continued.
  • Be cautious while leveraging while leveraging
    is a good tool for increasing your profits
    manifolds, it also equally enhances the chances
    multiplying your losses. Every time a trade is
    entered into, before looking at the possible
    profits, one must understand the losses which may
    have to be booked.
  • Always use stop loss orders in order to improve
    the profitability while managing the risk, the
    market order ideally should be with stop losses.
  • Trailing stops to lock-in profits to maximize
    the benefit of profits, a combination of
    different stop loss orders should be used. A
    trailing stop loss is used to book profits when
    the market trend is strong.
  • Greed and fear problem with trading are the
    biggest emotions - greed and fear which take the
    front seat and drive the trader to take hasty
    decisions. These emotions should not get the
    trader to take any decisions and thus a trader
    should not get afflicted towards any currency
    pair(s). Unrealistic profit targets (read greed)
    dont encourage profit booking at the right time
    which is similar to fear when the profits are
    booked too early in the trade.
  • Appropriate position sizing the quantum of
    trading is equally important as in the risk per
    trade. The position sizing defines the potential
    profit for a trader.

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