Forex money management: how to manage your money in Forex - PowerPoint PPT Presentation

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Forex money management: how to manage your money in Forex

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You need to follow few steps in Forex for managing your Fund: • Try to Know your Risk per Trade • Do not forget to use Stop Loss • Always Consider Risk to Reward Ratio of Trades • Try to use your Leverage Wisely • Don’t let your emotion to trade • Try to maintain your Trading Record Try to read as much information as you can. If you can move in an organized and planned way, you can manage your fund very well. – PowerPoint PPT presentation

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Date added: 25 September 2019
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Provided by: ForexSecret123

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Title: Forex money management: how to manage your money in Forex


1
Forex money management how to manage your money
in Forex
  • Theforexsecret.com

2
If I ask you can you say what is the difference
between a new trader and a professional trader?
Most of the time we get this kind of
question.     Well, the answer is there are many
differences but the main difference is the novice
always thinks how much money I can make? On the
other hand, a professional trader thinks how much
money I could lose in this forex business.  
If you thank upon this for a moment, you will
find these two are very opposite to each
other. But some of you might ask if, in the
beginning, I think about losing money then how
can I do well in the business. 
But those who are professional in Forex trading,
they know very well that, the key strategy to win
in the forex business is to manage the laws to
survive in the long run.
So the most consistent truth in forex business,
if you continue the business, in the long run,
you have to incur some loss at some point
regularly.
3
So when we enter a trading business you have to
consider loss as a very normal situation. Of
course, as an investor or as a trader we don't
want to go to loss. But we have to consider loss
as a component of reading as the profit does.
That is the reason why most of the time we talk
about managing the risk factors.
So to be consistently in profitability you need
to use protective Stops so that it doesn't expose
you to the market risk and when the market moves
against you, you can get out of the market very
quickly.
Emotion in trading cameras much harm especially
when you are losing in the trading. Most of the
people do not have the plan when to take the exit
but the professional traders they plan their exit
before they enter into the market.
Traders who follow other people, do not have a
plan, who cannot identify the risk factors, they
lose their money in the three following steps
4
1st Hope It is an obstacle to Money management
   First is hope, you always hope that the
market will go up but ironically it does not.
2nd Wish It is a perturbation to your Money
management    When your hope doesn't work you
start to wish things. You wish if the market
would go up so that you can get back the money
you have invested in.
3rd Desperation Final step to lose your money
management control   The last step is
desperation, in front of your eyes, you see that
the market is going down and down against you and
at some point as margin trader you might lose
your money by shut downing your account.
5
So what happened wrong in this trading business?
It is very difficult to make a decision when you
are already in a tough battlefield. So when you
are trading on a demo account it doesn't matter
much how you make your decisions. But when you
are trading in a real account you put your money
online then you Trade either out of fear or out
of your emotion.
So we should do our business solely based on our
sound analyses and thoughtful projection rather
than just the need to get out of the trade.
How many times you got out of the best trade and
then you again saw that the market is moving to
the direction your projected.  It happens to all
the traders. But those who don't want to let this
happen to them anymore, take a giant step to be a
good brother. For that reason you can follow
some strategy
6
1st.  First, you have to determine your
entry.   2nd. Second, you have to identify your
potential risk factors.   3rd. You have to
determine your strategy in that particular
situation.   4th. Finally, you have to project
your potential profit target again and again.
Now the Trading Secret   Now think about
statistics. The most common, easiest and
frequently asked example is a coin toss. It is a
50-50 chance whether there will be ahead or a
tail. So when we toss a coin the chance of
gaining is 50 and the chance of losing is also
50.
7
So what if we get 1 when we win. And lose 1
when we lose the toss.   When we do this, we are
putting ourselves in a position of Break-even. So
to be profitable we need to do one of the two
things     Whether we need to win a higher
percentage in the coin toss or we need to win
more when we are right than we lose when we are
wrong. So commonly most people prefer to win when
they are right.
What if, we get 5 when we are right and lose 2
when we are wrong. In this way, we can always be
in a profitable position. But I want to do this
five days in a week and 24 hours so that I can
win in the largest portion of a coin tossed.
What if, we get 5 when we are right and lose 2
when we are wrong. In this way, we can always be
in a profitable position. But I want to do this
five days in a week and 24 hours so that I can
win in the largest portion of a coin tossed.
8
The professional trader knows very well that in a
single trade he can gain or lose money but he
also knows after a series of trades he can come
out profitable at the end of the day. If you take
10 trade, out of that, at least in 3 trade you
will lose, so if you keep doing this again and
again then you can make a profit.
So you have to detach yourself from the outcome
of any single particular trade. You have to look
at the series of trades, in a month, every 3
months, or yearly. Because the professional
traders know after a series of trade they can
make a profit.     They know, they had been
profitable in the past, so they know, chances are
good, they will make a profit in the future.
And this is the key success factor of
professional traders, they always try to keep
their emotions out of their business.
9
You have to consider trading as a business rather
it is a source of entertainment. So you have to
be consistent in your trading approach and how
you handle losses. That is one of the best
qualities of good traders. When new traders
start their business, in the first trade they
make 10 pips, on the second they make 10 pips,
again 10 pips but after that in the 4th trade
when the market does not move according to their
will, they lose 50 pips where they targeted 10
pips. So at the end of the month overall, he
lost 20 pips. This is a simple classic winning
half of your trade.
What if the market reverses just before hitting
my target   It is very frustrating that the
market just reverses without touching your target
profit.    To avoid that move your protective
stop to break-even even if at least the market
moves halfway to your target.
10
How many lots should I open?   For example, if
you have 4000   If par pip cost 16/pip. So
if I have 100 Pips Dollar loss that means
16100 1600 will be your loss, so in this way,
you can trade only trice or thrice.     So we
should risk a very small percentage of our
equity. so that we can trade even after 1 loss.
So we should rise by 5 or less of our equity. So
for example 5 of your 5000 equity.
11
Conclusion and Recommendations
        Try to Know your Risk per
Trade         Do not forget to use Stop
Loss         Always Consider Risk to Reward
Ratio of Trades         Try to use your Leverage
Wisely         Dont let your emotion to
trade         Try to maintain your Trading
Record  
Try to read as much information as you can. If
you can move in an organized and planned way, you
can manage your fund very well.
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