Have you heard the old saying “cut your losses short and let your profits run”?
Here, let me enlighten you.
Forex money management is a death trap for new and old traders. Most traders know this but only a few actually have the discipline to stick to this golden rule.
Tracking indicator strategies are a must to establish insanely high leverage in Forex trading. This leverage can be used to your every advantage to run up that account and earn practically huge profits. Be very careful. Holding on to too much leverage is also a double-edged sword that may scar you badly.
The risk in trading is inherent. There is no denying the fact that anytime you enter a trade, the possibility of losing makes up the general rule, rather than the exception. Why? As much as you do not want to admit it, there is no perfect strategy in Forex trading. The only choice you need to make is to either make money or not make money: the key to that is Forex money management. In fact, this is the only strategy that is not based on signals and indicators but is most reliable when you do it right. This is the main reason Forex money management is vital to success in trading.
Forex money management reflects your discipline and practical training as a trader. You do not just walk into the unknown without a hint on what is actually live trading. It means trading with a plan, not just for the sake of trading. Forex market is all about trading and learning at the same time.
At any time you trade, there is always a chance to effectively and efficiently manage your account balance. This chance allows you to showcase your Forex money management skills. Don’t waste it because whether you like it or not, it will determine your career in Forex trading.
As human as we are, we have our own weaknesses. We are weak and feeble. We easily get tempted. Most of the time, we act on an impulse. We tend to focus more on trades that will bring us potentially profitable trades rather than focus on ourselves on how to do it effectively. It is where we can avoid long-term losses because managing it equates to optimizing your profits. More often than not, the temptation and sense of urgency to be ahead of the game galvanized most traders into action without considering the potential losses this baseless itch might cost them. It is an uncontested fact that actions based on impulse are not always right mainly because it is irrational. The adrenaline blocks out all rational strategies. They are spur-in-the-moment decisions that are not clearly thought of. The time that you think it is right is the same time it is most definitely not. Well, you have got some coping up to do.
You see, Forex trading is not for the faint of heart. You will not survive if you constantly intend to just top up your account balance. There will come a time that you will not fail to recall your losses. Why? Your losses can be credited with the recurrent factors of failure in Forex trading — low start-up capital, greed, refusal to acknowledge a wrong game plan, and the list goes on. Whilst this is true, by experience, your losses are likely to be attributed to indecisive trading! Yes? Well, it is high time to burst your bubble. These faltering trades are what you came up to with a poor Forex money management skill and wrong indicator strategies. Own it, acknowledge it and learn from it!
This is, quite frankly, the line that delineates amateurs and experienced traders. Amateurs have the will but they always lack the skill. In this largest and most accessible financial market, do you think that will alone is enough? If it is then we better quit at our jobs and start trading. Unfortunately, the Forex market is not all about that. It’s not as simple as you think it is. You need the skill to survive. The only way to thrive is acquiring a skill in Forex money management which starts from choosing the right trading indicator strategies. Managing your money will be rendered useless if you do not have the strategies that fit into it. As you find your way through this business and as you familiarize yourself with its intricacies, you will find out that Forex money management and trading indicator strategies work on a symbiotic relationship. It is existing and “living with” the other as one cannot exist independently on its own. They both complement each other. This is your golden rule. The only thing you are left with to do is to follow through. Do it!