FOREX MONEY MANAGEMENT

Hello Friends,
I hope you are doing great. Today I would like to share few things that I believe are important to know as a trader. I want talk about a method which keeps your account always in green. You will get to a point where you will have a good run and you will make some cash only to loose it all and go back to your starting capital few trades later. If you already experienced this phenomenon then great, if you haven’t then I hope you do (earlier the better)

Our brain constantly battles between two emotions, Greed and Fear. When we see some green in your account, the “Greed” takes over and we start to bet more and take more risk. Basically starts to enter trades that we are not so sure about and skew the Money Management rule to make more profit. Life is even harder for people who trade with little amount since they have increased pressure of quickly doubling and multiplying their account several times over.

So here is the tip on how not to loose once you made some cash. Here is what you can do. Every time your account balance go up by 15-20% you take it out, either withdraw that money or move it into a different trading account. This way you don’t see that money in your account and you don’t fall into taking unnecessary risk.

This all sounds good but you might ask “How am I going to increase my equity so I can trade more lots? “. So this is what you can do. From the 20% you have taken out, put 50% away for trading, 10% for just for Merriment and rest 40% for everything else like paying bills, food etc. I personally think that the 10% is the most important part. When you use this 10% to do things that you love doing then your brain starts relating to trading as fun and rewarding exercise rather then just another way of making money. Bottom line is that we should try to have more fun and you would see that money would just come along as part of it. I would like to call this Advanced Money Management (AMM, another acronym for you)

If you think that above make sense then I would like to ask you to go and have fun with your 10% (10% of 20% total) and share your experience on the forum. It doesn’t have to big expensive holiday, even a nice dinner with your family would count

Thanks remain bless

Prince Adewale