Money Management 5 of 7
One of the basic laws to be used with the win-loss ratio is good money management. A win-loss ratio can
be improved with good money management.
The first rule is to trade money you don’t need. If you don’t need the money then you can be more in
control of your emotions and your trading. Make sure that the money you are trading with is not needed
for personal living expenses. You need to know that the more money means to you, the harder it is to
trade. To a trader money is just a means of measuring your trading results and success ratio.
Most traders feel that you should not risk any more than 5% of you trading account on any one trade.
We feel that you may want to consider 1, 2 or 3 % to start with. So if you have an account of $8000,
you should only trade $400 or 8 mini lots at one time using 5%. When you use 2% of your account you will
only be trading 3.2 mini lots per trade. The reason to trade with such a small amount of money is to stay
in the game and let the probabilities work for you. Preserve your trading capital so you can stay in the
game. The more investment capital you have to trade, the better the chances of the probabilities working
for you.
Tagged With Forex Market Training, Forex Trader Training, Forex Trading Education
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