Money Management

Dear all,

Many people out there are looking for the perfect set ups and methods that can be applied in their trading. In other words, they are looking for the 'Holy Grail'. In my view, from my precious past experiences for the last few years taught me that money management is the 'Holy Grail'. Without a slightest doubt, money management will determine your longevity in this business. Regardless of whatever techniques you are using, a proper money management should be your top priority.

Today i will explain on the proper way to apply money management in currency trading.

1. First you should decide on how much you can afford to lose in one single trade

2. For example, i decided that i am willing to risk 2% of my entire capital per trade

3. Capital : $10,000

Risk : 2% = $200

4. Then you need to determine your range (stop loss). So if you are long on GBP/USD, you

need to look for the next support to determine your stop loss. For example your stop loss is 50pips.

5. Here is the formula :

x or lot size = risk/range or stop loss

6. Lot size is 4.

It is important to use this money management style as it will eliminate your fear.