In Forex it takes money to make money. Forex carries high risk that can potentially give high returns which are going to be compared to the funds you’ve got in your account, as in any other speculative form of investment.
Since Forex is risky, inevitable losing trades are part of gambling, you really need to get to play the game by understanding its rules. The rules that determine the future of your funds: Risk Management.
The big Forex traders keep their risk down to 1% a trade or even less. It’s vital to protect your funds since you there is no way to get rich if you keep losing them. As your funds grow, you would gradually reduce the percentage risk, not the other way around.
5% of your funds is the more that you would risk on any trade, as a general rule. In most cases you will want to go lower than that. 5% might work for small funds where you’re willing to take a chance that you might lose all of the money.
You need good discipline and great money management to protect your funds in difficult times. Keep records of all of your trades. Your trading records can allow you to get back control whenever things appear to be going wrong, you will defenitely have a huge advantage if you have results to analyze.
While it looks like a series of quick executed trades, you do not really have to sit and manage your trades all day. Like all other strategies, day trading is running with some rules, so it is possible to have a good forex day trading system that will do signals, the analysis, or even the trades for you.
When you are deciding on your position size, do not make variations according to intuition or to whether your previous trade was successful or not. You should consider your leverage and what proportion of your total funds will be attached to a trade. Remember thi is part of your risk management strategy.
You will need a great deal of patience, but if you’re clear aims for your trading and understand the points in this section, you’ll put yourself in a good position to make profits from trading Forex online.
Losses should be admitted as a normal part of trading and you should plan for them, to the effect that you always set up a stop loss when you open a trade. Include a stop loss expressed in terms of pips in your trading plan.