So you want to know what it takes to be a good trader.
If you are struggling to make some extra bucks through trading then you have landed at the right place. You see some years ago I was just like you may be right now. I was at my ends wit as I could not put the pieces together.
I knew that trading was no rocket science but still I could not make a decent profit on the market. This is until I stumble upon one crucial part of my trading that I was always neglecting, my Money management rules. Once I started following those simple rules that are outlined below, my trading took a dramatic change.
Forex over the past few years has attracted a lot of new comers to this market. This major interest in the foreign exchange market has been driven by the massive amount of money someone can potentially make trading the Fx market. This desire to make money within a click of a button has been a major trigger to get so many people interested in forex. However, due to the fact that most new comers are blind folded by the amount of money to be made, they forget the one crucial thing every professional traders follow. The money management rule.
Remember that trading is based to some extent on probability. With proper Money Management rules you will be in the game long enough to may be double or triple your account in a matter of months.
To make things easier, I have outlined those critical Money Management rules below.
* Only risk 2% of your total account on any single day. If your system gives you 5 different trades, make sure that the 2% is distributed over the 5 trades respectively.
* Your trading size should be less than 1/10th of your account size.
* Take partial profit each time you reach an area of heavy support/resistance. Once this is done bring your Stop Loss to Break-Even thus protecting you from any unpleasant surprises.
* Take partial profit when you’ve reached an area of support/resistance and bring your Stop Loss to Break-Even. (This has saved me many losing trades).
However simple those rules are, those new to trading always tend to forget about them. Applying those rules accordingly will without any doubt minimize the risk and alternatively help you stay in the game long enough to profit from the market.
Here is a guide to give you an idea of trading lots:
1 Lot = 100.000 Units of a currency. Pip value = 10 Dollar
0.1 Lot = 10.000 Units of a currency. Pip value = 1 Dollar
0.01 Lot = 1.000 Units of a currency. Pip value = 0.1 Dollar
Taking into consideration that you are risking only 2% of your total trading account, your next step will be to pick the right lot size to suit your risk level.
For more information on how to become a super successful Forex trader, read my full review of Forex Mentor and Candle Charts and grab your copy of FREE Forex Video Courses.
categories: Forex,Currency Trading,Money,Finance,Investing,Investment,Trading
Tags: currency-trading, finance, forex, forex-trading, investing, investment, money, trading