Forex Money Management

Forex money management is not a favorite topic of many traders to think about, however your long term sucess and viability in the market depends on it.  Without it you are running the risk of a few bad trades wrecking your account.

 

It's real quite simple.  To avoid risking too much on a trade you should determine your risk before entering the trade and stick to that risk.  I recommend risking 2-3% of your account balance per trade.  This doesn't mean you are limited to making 2-3%, it means if you trade is wrong, that is the most your account will be reduced by.

 

insert hypthetical trader 2-3 % 

 

 

Failure to set a risk amount, you run the risk of a few real bad trades negating many smaller good trades.