Saturday, January 27, 2007
Forex Day Trading System - Money Management
Forex Day Trading System - Money Management
Charlie, one of very few people and a regular reader of my blog asked me a very important question, yet so frequently overlooked by novice traders. The question was "What do you mean by money management"??
I am glad you asked..Money management is very important in any online business, let it be commodity trading or forex trading or options trading or gambling even for that matter. So what does money management means??
In simpleterms it means that -
1. Limit your losses
2. Let your profit run.
3. Know why much to put on stake in each trade..In short, don't bet the entire farm on a single trade
All the 3 points are more than important in any trade you place..The 1st 2 points are kind of interlinked in any form of trading syatem - forex day trading system or swing trading system. It refers to put stop loss in the trade..Generally some people when placing trade keep large stop losses expecting that the trade will recover from a losing position. Incase they are winning, they take the profit too early with the fear that they will lose the winning position..
A smart forex trader does just the opposite of that..When you make any trading strategy, based on RSI or MACD or Exponential moving averages or candlestick or fibonacci levels or any indicator, always place considerable thought on money management as well!!
Thats all in today's session in learning forex day trading system..Visit again to learn more. Infact you can add the pages to the favorites..
Charlie, one of very few people and a regular reader of my blog asked me a very important question, yet so frequently overlooked by novice traders. The question was "What do you mean by money management"??
I am glad you asked..Money management is very important in any online business, let it be commodity trading or forex trading or options trading or gambling even for that matter. So what does money management means??
In simpleterms it means that -
1. Limit your losses
2. Let your profit run.
3. Know why much to put on stake in each trade..In short, don't bet the entire farm on a single trade
All the 3 points are more than important in any trade you place..The 1st 2 points are kind of interlinked in any form of trading syatem - forex day trading system or swing trading system. It refers to put stop loss in the trade..Generally some people when placing trade keep large stop losses expecting that the trade will recover from a losing position. Incase they are winning, they take the profit too early with the fear that they will lose the winning position..
A smart forex trader does just the opposite of that..When you make any trading strategy, based on RSI or MACD or Exponential moving averages or candlestick or fibonacci levels or any indicator, always place considerable thought on money management as well!!
Thats all in today's session in learning forex day trading system..Visit again to learn more. Infact you can add the pages to the favorites..
