PROFESSIONAL FOREX SYSTEMS

Our store on eBay:

http://www.ebaystores.com/professionalforexsystems
 PROFESSIONAL FOREX SYSTEMS

MONEY MANAGEMENT IN FOREX TRADING: 4 RULES, SECRETS AND EXAMPLES

Money management - money management, capital management. Abbreviated-MM. Some

MONEY MANAGEMENT IN TRADING

It's such a simple formula that you always need to keep in mind.

The formula of money management, and therefore success in trading:

1. The first thing a trader should think about is capital preservation.

2. The second is how to make a profit.

3. The third is how to multiply it.

4. And then again in a circle.

For many traders, everything turns topsy-turvy. They think only how to make a profit, but more,
all the attention is focused on this — and here lies the fatal mistake. This approach fuels greed
and the trader, overcome by it and other emotions, commits stupid things that are sometimes
very expensive. To avoid this, you need to set the right goals, namely: do not try to get rich
quickly, and try to have good trading statistics.

PROFESSIONAL FOREX SYSTEMS

Focus on positive statistics and profit will be applied automatically, that's so simple! This is one
of the secrets of successful trading, which is pointed out by professional traders, be sure to take
note! Focus not on the amount of profit, but on the positive statistics.

Perform the second point of the plan - profit, will help a good trading strategy. It can be your
own or ready, but it must be checked and tested by you personally and fit you personally. Read
more about how to make your trading strategy here.

The third point-the multiplication of profits, is an automatic consequence of the first two
points. If you care about the first two points-capital preservation, good trading statistics, then
your profit will inevitably grow.

Money management on Forex also includes a pre-calculated percentage of risk for each
transaction. There are some kind of generally accepted norms, depending on what type of
trader you are: conservative, moderate or aggressive.

* Conservative money management-1-2% risk per 1 trade. This means that the level of losses in
one transaction is limited to 1-2% of the Deposit, less is possible, more is impossible. To do this,
stop losses are set accordingly and the lot is calculated. In other words, if the trade is
unsuccessful and the stop loss works, your losses will be only 1-2% of the Deposit or even less.
This is the most preferred approach not only for novice traders, many professionals use a
conservative APPROACH.

* Moderate RISK-3-5% risk per 1 trade. A riskier, but potentially more profitable option.
Personally, I think it is reasonable to use it only if your trading strategy gives a really strong
signal and with a high probability it will be possible to correctly predict the further movement
of the price.

PROFESSIONAL FOREX SYSTEMS

* Aggressive MM-5-20% risk per trade and even more. Aggressive approach to MM allows very
high risks on the deal - from 5% and more. This is an extremely dangerous and unreasonable
approach. It works well for ludomani or adrenaline addicts than serious traders.

For example, if the risk on the transaction is about 10% of the initial Deposit, it is enough only
10 unsuccessful trades in a row to remain without money. And many beginners who do not
know anything about MM, risk in the transaction for 20-30% of the Deposit, wanting to get rich
in one transaction. This, of course, is pure madness. Such thrill-seekers do not stay long in the
market.

WHICH MM TO CHOOSE

For beginners, definitely-conservative, with a risk on the transaction of about 1% or less. Why
so, I think you already understood themselves.

More experienced traders, along with experience, get the "right" to increase risks. Only with
experience and nothing else will you come to a clear understanding of what you are doing and
what can lead to a mistake.

SECRETS OF MONEY MANAGEMENT, WHICH ARE NOT KNOWN TO BEGINNERS

Imagine that we will flip a coin. In theory, with a conservative MM, we should always be near
breakeven, because the probability of this or that outcome when throwing a coin is 50%, so
that the size of the Deposit after a series of throws should remain unchanged, plus or minus. If
not for one "but" - broker Commission and spread, which pays the trader.

Obviously, in order to earn, you need something more, because you need to cover the broker's
Commission, and even add here the Commission for the input and output of funds... and that's
the secret — in the ratio of risk to potential profit.

RISK TO PROFIT RATIO IN MONEY MANAGEMENT

Let's imagine the same situation with a coin toss, but in case of loss we will lose 1%, and in case
of winning we will gain 3%. Let's make simple calculations:

* Let's say 7 out of 10 throws were unsuccessful (we are not lucky) and we lost 1% on each, and
in total it will be 7%. And in 3 cases we won 3%, in total-9%.

* To sum up: -7%+9%=2% of net profit and this despite the fact that we had more failures than
wins.

PROFESSIONAL FOREX SYSTEMS

Thus, having not even the best trading strategy, which gives us a profit in 7 cases out of 10, but
correctly observing money management, maintaining a risk-to-profit ratio of 1:3, in the end we
still remain in the black! This is the power of competent money management, every Forex
trader is obliged to take it on Board.

Read and watch the video: Green Red Candle Strategy: profit in 9 minutes a day

Of course, the ratio of risk to profit can be 1:4, 1: 5 and even more, especially when trading on
the trend, but the main thing is not to overdo it and be realistic. Really assess the prospects,
whether there is really an opportunity to expose a higher ratio.

HOW IS THIS TECHNICALLY FEASIBLE WHEN TRADING

I think you have already understood how, but just in case we will stop even
more, as we read a lot of novice traders.

The size of your stop loss should be the right number of times less than the
size of the take profit.

* For example, the stop loss is set so that in case of failure the loss amounted
to 1% of the Deposit (conservative MM), which in points will be, say, 100.

* Then take profit should be set so that its size is 3 times larger than the stop,
that is, 3% or 300 points.

* Now, if we are lucky, we will get 3 times more than we could lose. We are
good fellows and competently observe the rules of the GAME.

PROFESSIONAL FOREX SYSTEMS