Carrying out transactions in the Forex market may seem like an attractive investment however real accomplishment lies in managing your money while you’re at it.
Below are some tips that you can follow to succeed at managing money effectively!
- i) Monitoring your Risk per Trade– This is a measure of the quantity on your trading account that you are willing to forgo per trading that takes place. Certain management experts suggest that the upper limit of this value to be around 2% and a lower at 0.5% if you are a beginner.
You can determine your trading position, for instance, if you hold the value at 2% and your investment amount is $100, you can simply use the formula of money management to see where you stand.
People who are using the aggressive method and trying to earn more by increasing the risk is making a big mistake. Trading is all about probability where you need to find the trade setups based on technical and fundamental analysis. When you find a potential trade setup, make sure you are not risking more than 2% of the account balance to ensure the safety of your account balance.
- ii) Applying stop losses- A stop loss ensures that you are not making the maximum loss of money in a single trade. Albeit changing market positions can cause you to incur loss however by applying tools such as volatility stops, or time stops can help you adjust to market conditions. Some of the