Whenever you trade in the currency markets, or any market for that matter, solid money management is always required, not only to keep your investment safe but for peace of mind too. Below we look at some basic but detrimental tips to keep in mind for currency exchange trading. Remember your chances of success and profits rely largely on how well you manage your bank and by doing so minimizing your liabilities.
Tip 1 - Risks - Each trade should be accessed individually for the potential risk that entails. Ensure that you only have a small percentage of your bank at stake, for example 5% to allow for a negative trade. This should be more than adequate especially if you are already using a solid strategy.
Tip 2 - Stake Size - It is imperative that you trade with a stake per pip relative to your bank size. So for example of your bank is $400 then you should trade with points of about $1. The risk is too high with this size bank if you are using $3 per pip for example.
Tip 3 - Realism - Professional and profitable traders understand both the risks that are involved in the markets as well how to cope with the eventual losing trades as they occur. Your bank will be at some risk at some point and it is impossible to win every trade so as soon as you accept this and be realistic about the daily outcomes, your bank should benefit in the long run.
I hope this is a good start in order to outline how you should to properly manage your trades as well as profit on a daily and weekly basis and how important money management is in currency exchange trading.
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