MONEY MANAGEMENT RULES
Some simple guidelines may help keep you in the game long enough to learn winning
ways. Breaking even is okay, too. hope to bring value in here!!
• Go slow & Be patient. If you are new to trading, start out with one of the paper-trading demo
accounts offered by most brokerage firms. Get a feel for the mechanics of
trading and for how the markets operate. Ont he FOREX Forum you will see a lot of trading ideas posted by a wide range of traders 24 hours a day when the markets are open. You will also see a wide
range of trading styles. Pick some posters you like and follow their trading ideas
and how they make their decisions. Don’t look for them to tell you what to do. In
the end, it’s YOUR decision how to manage your money, not theirs. Develop
your own trading approach as quickly as possible.
• Start out with a mini-account or even micro-account. Trading with real money is a lot different than
paper trading. Try it out for real account. Forget the dollar value of your profit/loss (P/L). Trade for pips. You can always increase your leverage later. In the ideal case, you might be able to fund a full-sized
account with the profits from your mini. Take your time!
• Expect to have many losing trades. They come with the territory in FOREX
trading. If you talk to some of the professionals in the big institutions who have
survived for many decades, the best will tell you that the markets have taught
them humility. Most will say that they would be happy to be correct 51 percent
of the time. They will also tell you that, given the global scope of the markets,
things often happen that surprise even the most experienced participants.
• Have the strength of your convictions, but don’t be stubborn. If you find it
hard to admit when you are wrong, then you might not be suited for trading.
However, flip-floppers have a hard time as well. Do your preparation for a
trade. Have the strength of your convictions but don’t get married to an idea that
is not working for the reasons you thought it would.
• Avoid the myth of diversification. Some currency pairs are highly correlated to
others. These correlations tend to change over time, though. Check out the
correlations before diversifying your portfolio of positions, or you could find
that there is more risk in your position portfolio than you thought.
• Don’t overtrade,
• When in doubt, stay out.
• Trade with the trend, not against it, especially when momentum is
accelerating. Retail traders often prefer to play extremes of ranges rather than
trading breakouts. So, when trading against the trend, be quick to take your
profits (or losses).
• Use positive risk/reward objectives. The expected gain from a trade should be
two to three times the amount you figure you might lose.
cheerssss
Some simple guidelines may help keep you in the game long enough to learn winning
ways. Breaking even is okay, too. hope to bring value in here!!
• Go slow & Be patient. If you are new to trading, start out with one of the paper-trading demo
accounts offered by most brokerage firms. Get a feel for the mechanics of
trading and for how the markets operate. Ont he FOREX Forum you will see a lot of trading ideas posted by a wide range of traders 24 hours a day when the markets are open. You will also see a wide
range of trading styles. Pick some posters you like and follow their trading ideas
and how they make their decisions. Don’t look for them to tell you what to do. In
the end, it’s YOUR decision how to manage your money, not theirs. Develop
your own trading approach as quickly as possible.
• Start out with a mini-account or even micro-account. Trading with real money is a lot different than
paper trading. Try it out for real account. Forget the dollar value of your profit/loss (P/L). Trade for pips. You can always increase your leverage later. In the ideal case, you might be able to fund a full-sized
account with the profits from your mini. Take your time!
• Expect to have many losing trades. They come with the territory in FOREX
trading. If you talk to some of the professionals in the big institutions who have
survived for many decades, the best will tell you that the markets have taught
them humility. Most will say that they would be happy to be correct 51 percent
of the time. They will also tell you that, given the global scope of the markets,
things often happen that surprise even the most experienced participants.
• Have the strength of your convictions, but don’t be stubborn. If you find it
hard to admit when you are wrong, then you might not be suited for trading.
However, flip-floppers have a hard time as well. Do your preparation for a
trade. Have the strength of your convictions but don’t get married to an idea that
is not working for the reasons you thought it would.
• Avoid the myth of diversification. Some currency pairs are highly correlated to
others. These correlations tend to change over time, though. Check out the
correlations before diversifying your portfolio of positions, or you could find
that there is more risk in your position portfolio than you thought.
• Don’t overtrade,
• When in doubt, stay out.
• Trade with the trend, not against it, especially when momentum is
accelerating. Retail traders often prefer to play extremes of ranges rather than
trading breakouts. So, when trading against the trend, be quick to take your
profits (or losses).
• Use positive risk/reward objectives. The expected gain from a trade should be
two to three times the amount you figure you might lose.
cheerssss
Let Market Tell You
