People who make money.
What separates them? It's not the brain or the knowledge. So many smart people are losing money in Forex trading. Often the problem lies in the mismanagement of money - which delays the loss of trades too much or generates profits too soon. Successful traders have long lost Forex currency trading in the three commandments of Forex Trading.
The first commandment: Calculate the risk-reward ratio
The first thing to consider in forex trading is its risk-reward ratio. You must make sure that the potential benefit of an exchange is greater than the potential loss. Therefore, use a risk-reward report that is no worse than 1: 2 - therefore, the risk is a loss of profit for every …show more content…
This chart shows some statistics for making losses As you can see, more justice has fallen, the bigger and less unrealistic returns you just need to return to breakeven.
Many traders use 2% as general terms. If your account balance is $ 10,000, the highest absolute risk you should run in a single transaction is $ 200.
For example, you buy a lot of EUR / USD and enter the trade at 1.3600. You are willing to risk $ 30 in this trade. In this pair of money, every pip move on the market is $ 1 of income or loss. So, if you set your stop order at 1.3570, 30 pips at the bottom of your entry point, you do not bring in more than $ 30.
And remember: STOP means stop. One of the smallest mistakes I've seen is that new merchants have changed positions. They become emotionally involved in a trading loss and continue to move the stop to prevent the stop order from being triggered. This is what happens.
In the same trade, the euro fell to 1.3572. You're afraid to hit your stop and get him down 20 pips. He is now at 1.3550 and still risks being touched. If it hits, you will lose $ 50 instead of your expected $ …show more content…
They think that even if a trade is for them if they continue to buy at a lower price, they get a better average price for the whole trade. It stacks only higher losses. Just add to a business when it's going well. Do not make a bad business worse.
The Third Commandment: Never Overcome
Always make sure you have enough money in your account for the size trading you are doing. Excessive action can quickly lead to a margin call and your account is empty.
Suppose you have an account with $ 500.00. You buy 5 10k a lot of EUR / USD. This is a 50,000 business unit only. The margin requirement is $ 50 per lot, so your total margin requirement is $ 250 - half of your balance!
It was a huge over-indebted position. Since you exchange 5 lots, each transfer of a pip is synonymous with profit or loss of $ 5. So, the market is expected to move just 50 pips - just normal in the retracement market in this highly traded peer - and you'll get a margin call, which will close all your