Money Management

Money management is part and parcel of any trading strategy. Besides knowing which currencies to trade and recognizing entry and exit signals, the successful trader has to manage his resources and integrate money management into his trading plan. Position size, margin, recent profits and losses, and contingency plans all need to be considered before entering the market.

There are various strategies for approaching money management. Many of them rely on the calculation of core equity.

Core equity is your starting balance minus the money used in open positions. If the starting balance is $10,000 and you have $1000 in open positions your core equity is $9000.
When entering a position try to limit risk to 1% to 3% of each trade. This means that if you are trading a standard FOREX lot of $100,000 you should limit your risk to $1000 to $3000 – preferably $1000. You do this by placing a stop loss order 100 pips (when 1 pip = $10) above or below your entry position.
As your core equity rises or falls you can adjust the dollar amount of your risk. With a starting balance of $10,000 and one open position your core equity is $9000. If you wish to add a second open position, your core equity would fall to $8000 and you should limit your risk to $900. Risk in a third position should be limited to $800.
By the same principal you can also raise your risk level as your core equity rises. If you have been trading successfully and made a $5000 profit, your core equity is now $15,000. You could raise your risk to $1500 per transaction. Alternatively, you could risk more from the profit than from the original starting balance. Some traders may risk up to 5% against their realized profits ($5,000 on a $100,000 lot) for greater profit potential.





The Best Forex Robot For You


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Dreamstime Finding the best forex trading system is no easy task, many part time traders have spent thousands of dollars looking for best forex trading software. It's only reasonable that the best forex brokers are looking for the best forex trading systems. Have a think about that word "system". Choosing the best Forex trading software is crucial to your success.

Here are some essential factors you should be looking for before parting with your money to buy best forex training software. Consider your skill level. It is greatly essential and crucial for aspiring Forex traders as well as those professionals in the trade to be aware on how to choose the best Forex trading software to aid them in their foreign exchange activities. The best forex trading platform should not promise you are going to be rich overnight. If it does, you can ignore it totally and move on in finding another one that works best for you.

The problem with most of the robots is that they are tested with "play" accounts, combined with past results. This makes the transition to real accounts totally random, which leaves you wondering wahat are the best forex broker options. Also you might be wondering what is the optimimum method to find best forex signals. The same applies to the best forex ea. A useful idea is to check and see what others have said about the product or system.

How you you go about finding out who is the best forex broker? Find a website that does forex reviews these websites will provide you guidance and hopefully point you in the right direction. You can find daily newsletters from most of the websites with trading platforms. It’s very useful because the main objective of forex trader is to make effective trades by using all available information. The reviews are trustful and easy to read, it will help you make the right choice for your needs and temperament.