Improving Money Management in Forex – 3 Easy Steps

In Forex trading, money management is a serious factor and you must master it in order to have a long-term trading success. Let’s learn some easy steps to improve your money management skills in Forex trading.

  1. The Forex Trading account

The first step is to do with your forex trading account. As a rule of thumb, you should only ever risk 2% of your forex trading account balance on a single trade. But even before this when you first open your forex trading account, you should not risk all of your life’s savings on a single account.

Only put 2% of those savings into your trading account in the beginning. How can you guarantee that you will succeed with your first trades? You need to be able to easily start over again and if you risk all of your life’s savings on a single account then this is practically impossible.

  1. Leverage

The next step involves trading with leverage. As a leader in the forex industry, the IMMFX brokers offer very flexible leverage as high as 1:400. However, if you are a new trader this is far too much leverage to play with and should definitely be avoided.

Instead, consider 1:200 or less. Too much leverage is incredibly dangerous and can blow your trading account balance with one fell swoop. By using less leverage, you will be risking less of your capital overall.

  1. Stop Losses

Stop losses are an excellent money management tool in forex. If you don’t set well-researched stop losses position you will never become an accomplished online trader. So do your research before each trade and set carefully calculated stop losses based on technical analysis and market fundamentals.

Final Thoughts

Evidently, money management plays an important role in forex trading. If you want to become an accomplished, long-term trader you should implement effective money management techniques into your trading strategy, including a maximum 2% risk on each individual trade.