My Forex club Secrets.bz presents: Today I describe simple but very powerful strategy that I use in my trading. Don’t forget to check out my reviews on http://forex-systems-reviews.com/
Forex Money Management: Simple Forex Money Management Strategies Stop You Blowing Up Your Account!
Money management forex strategies (aka forex risk management) are the most basic, yet most critically important to get right because ultimately your long-term success as a trader relies not on how often you win, but rather how much you win when you are right verses how much you lose when you are wrong.
Even traders with a high forex probability expectation, or in other words a high win rate of say 70-80% can still lose money over all, if their forex losers are significantly larger than their winners.
Forex traders who have stood the test of time and have become successful have at some point come to grips with the reality that losing is a part of trading and there are times when your forex losers are consecutive.
This is why using a forex stop loss and having a conservative forex stop loss strategy is so important.
In addition to this it is also vitally important that you only risk a small percentage of your overall capital at any one time. 5% capital allocation is not too aggressive, nor conservative in terms of real risk and on a $5000 trading account means the maximum amount of capital risked at any point in time is just $250.
The next thing to consider when analysing trading opportunities is the forex risk reward ratio. A basic and commonly used benchmark in currency trading is a 1:2 forex risk reward ratio. The goal here is to win $2 for every $1 lost or in terms of pips to have a forex profit target or win of at least 200 pips for every 100 pips lost, while still only placing 5% of your total risk capital in the market at any one point in time.
This conservative approach to forex risk management will give you a significant window of opportunity and (hopefully) allow you stay in the forex trading game long enough to become consistently profitable, even when faced with a string of losses, which under more aggressive strategies may well blow up your trading account!
I hope you find this forex money management tutorial video helpful and which you much success with your trading!
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The Engulfing Trader – http://www.forexreviews.info/the-engulfing-trader-series/
The 5 Day Treng Training Series – http://www.forexreviews.info/5-day-trend-trading-course/
Weekly Forex Outlook and Review for the 28th of July all the way to the 1st of August 2014. In this review we go over a lot of pairs in the Forex Market and what to look for in the week ahead, also we cover a important topic in this review and that topic is the value and importance of following a good process in trading and stick to your trading plan..
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Thanks for watching and happy trading..