Money Management Principles

Trade with sufficient capital

One of the worst mistakes that traders can do is try to trade without sufficient capital.

The trader with little capital not only be an operator worried, always looking to minimize losses beyond the point of negotiating realistic, but it will also often be taken on trade Thursday before it can achieve any sense of commercial success of the method (s) or models.

Fiscal Discipline

Discipline is probably one of the most overused words in Forex Trading education. However, despite the click ¨ |, discipline continues to be the largest behaviour can become a master operator profitable. The discipline is the ability to plan your work and your work plan.

Iti¯ s ability to give your business time to develop without you take hastily on the market simply because you're uncomfortable with the risk. The discipline is also the ability to continue to negotiate the methods and modes even after you ¡¯ ve suffered losses. Do your best to cultivate the degree of discipline required to be a world-class operator.

Using risk-reward ratios

The following shows the extent possible the risk reward ratios, and the victory ratios necessary to achieve the breakeven point in a trading system.

Risk-reward ratio (pips) and Win Ratio required to reach the breakeven (%)

40/20 (2 to 1) = 67%, 40/40 (1 to1) = 50%, 40/60 (1 to 1.5) = 40%
40/80 (1 to 2) = 33.5%
60/20 (3 to 1) = 75%
60/60 (1 to 1) = 50%
60 / 90 (1 to 1.5) = 40%
60/120 (1 to 2) = 33.5%

Important Note

Never risk more seeds on a trade and then you plan to do. It doesn t ¡¯ wise to 100 pips risk to make only 10. Why? See the example below.

Equity earnings (seeds): 10
Stop used or seeds at risk: 100

You earn 10 times what saves 100 pips. You will not lose once and to report all profits!

This type of trade makes no sense and you lose in the long-term guaranteed!