Stress management

By: Kelly Price
Most traders don't have good money management and that's a fact and have no strategy to contain losses and maximize gains but it's the platform upon which huge gains and made and but most traders don't spend much time on it... - Why?

Because it forces traders to monitor their positions and to take necessary losses and have a cut off point where their wrong, and very few traders like to do that.

To practice successful money management, a trader should take many frequent small stops and try to make profits from the few large winning trades by following the big trends.

Most traders don't even do this, they insist on trading for small profits, in short time frames and place their stops in random volatility, all day traders and scalpers and they lose money

The fact is you will normally have more losses than winners when trend following - but your profits will be huge compared to your losses and to give you an example, I know a trader who harvests triple digit gains annually and losses 75.6% of the time! He makes such good money, because he keeps his losses small.

Most traders hate being wrong and always want to let a loss turn around or have no stop in the first place but when trading on leverage this leads to disaster. There is nothing wrong with losing, you are going to lose in Forex anyway, so accept it and keep your losses small.

Here are some tips to help you practice proper money management.

1. Place your stop as soon as you execute your trading signal, so you are not tempted to let a loss run - mental stops don't work for most traders so don't try using one.

2. While many say you should only risk 2% per trade, this is simply not practical on a small account so risk 5 - 10% but be more selective with your trades

3. All trades are the same in terms of potential and there is no sure fire trade so don't be tempted to bet big and a sure fire trade !

4. Risk more when your winning and have profit and risk when your losing - your aim is preservation of equity at all times and its easier to lose open equity, than core equity.

5.Don't trail stops to close and get stopped out by random volatility! If it looks like a big trend hold your stop back and take open equity dips - you need to run the big trends to cover your inevitable losses

If you want to win you have to stay in the game and that means preserving your equity and if you do this, the market will give you big trends which you can run and help you make a great second income.

Cut your losses and run your profits, is a phrase every trader has heard and its true and its the only way you will money at Forex trading.

Use the above money management tips and they can help lead you to Forex trading success.