abdulla1 Posted June 11, 2011 Share Posted June 11, 2011 In comparison to the amount of time, money and energy spent by some traders on Forex robots, error-proof technical strategies, and quasi-magical foreign exchange trading courses where we are promised to be made super-traders, it is a pity that money management receives insufficient attention. Although almost every trader worthy of the title is aware that success in Forex is largely dependent on careful management of losses, as well as profits, this aspect of trading is somewhat neglected in preference to indicators, statistics, analysis and strategy. Yet the first issue faced by a beginning trader is losing money while trading, and strategy or analysis doesn't say much about how to cope with it. As such, careful study and practice of money management methods must be paramount in the mind of the trader who is committed to achieving success in trading Forex. What is analysis? It is the identification of high probability scenarios for profits. Probability does not involve any certainty, and by definition, any analytical scenario, however solid it may be, will lead to losses sooner or later. In the case of the beginner, whose skills are underdeveloped in best cases, and undeveloped in the worst, losses will come a lot sooner than profits. It is clear, then, that any trader's education must begin with a good understanding of the importance and necessity of money management skills. Money management teaches us how to manage losses, and how to maximize profits. It all commands us to cultivate a responsible and disciplined attitude to trading by acquiring consistency in our habits. We are taught not to be erratic in trade sizes, to be consistent about the entry of stop loss or take profit orders, and above all, to regard loss as a natural, and indeed, inseparable part of a trading career. There are many ways of managing loss, but there is no way of avoiding it altogether in a trading career. Even George Soros has had a number of serious, sometimes massive blunders in his long career, but he is still regarded as a master trader by many. Warren Buffet bought the shares of an oil company at the peak of the oil bubble in 2008, and he made wrong choices with Salomon Brothers in the 90's as well. But all these traders were quick to recognize errors, and mange losses instead of denying them and letting them fester and achieve huge proportions. What happens to those who refuse to accept losses, and choose to add to them with the hope of eventual gains is obvious in the case of Nick Leeson and Jerome Kerviel, one of who bankrupted a U.K. bank, and the other lost $7 billion. Both went to jail eventually. So money management is the heart and soul of trading, the safety valve against errors, and the shield against fear and irrationality. Forex trading brokers may give you the tools of technical analysis and tens of indicators, but money management skills can only be acquired by diligent and patient practice, and a total commitment to success in trading. On the other hand, a master of money management is a master trader, and it is but a matter of time before he perfects his skills in analysis and strategy and acquires the great riches which he deserves. By Carl Hayes Quote Link to comment Share on other sites More sharing options...
myregister Posted June 11, 2015 Share Posted June 11, 2015 I am the one who advise many traders to keep their attention to this one. Money management which i shorten as MM playing an important part for forex trader, it can lowering the risk thus able to growing more profit if we can handle most situation. In the end, you must know about this issue too. Quote Link to comment Share on other sites More sharing options...
pepy Posted June 21, 2015 Share Posted June 21, 2015 Do you think you are the only one, i am also one of them that do those things my risk management as i said before is at around 3-6% usually i prefer 3% because that is just the lowest and to ensuring that i get low risk, my motto earn less is better rather than forcing ourselves to trade in bigger margin just to find we loss our money later. Quote Link to comment Share on other sites More sharing options...
myregister Posted July 20, 2015 Share Posted July 20, 2015 Who said i have thought like that, to be honest i never risked as much as 5% even that is as much as i want to risked. I prefer 4% or around 40-45 pips depend on the condition, that is quite low yes but since i am short term trader(not scalper) i think i can bear with that, but everyone has their own condition for RM isn't it? Quote Link to comment Share on other sites More sharing options...
pepy Posted July 26, 2015 Share Posted July 26, 2015 Who said i have thought like that, to be honest i never risked as much as 5% even that is as much as i want to risked. I prefer 4% or around 40-45 pips depend on the condition, that is quite low yes but since i am short term trader(not scalper) i think i can bear with that, but everyone has their own condition for RM isn't it? Everyone who ever try it for sure including me, i ever trade as much as 6% than yours which is 5%. Also that is just one percent difference so what is the big deal especially i am sure you are also not so veteran in forex and trade not more than 5 micro lot isn't it? With me growing my capital and also getting bigger nowadays i think money management is the most important aspect. Quote Link to comment Share on other sites More sharing options...
myregister Posted September 5, 2015 Share Posted September 5, 2015 Yes not as high as yours. Risk management is important so this is why i take it seriously than ever also in this threas i agree with it that a real deal in forex is actually a risk management. Quote Link to comment Share on other sites More sharing options...
pepy Posted September 10, 2015 Share Posted September 10, 2015 Yes i also agree with you, risk management is a real deal and the most important part of forex trading. Traders usually tend to avoid this issues and even trying to do betting with their trading. Actually the first thing what trader should know is how to manage the risk, before try to get profit. Quote Link to comment Share on other sites More sharing options...
myregister Posted September 23, 2015 Share Posted September 23, 2015 Probably the most real deal compared to the other, i know people want to get profit from forex but it is forex which become a high risk business that people need to think twice before. So, with a proper risk management a trader can lowering the risk while at the other time can maximize the chance of making more profit. Quote Link to comment Share on other sites More sharing options...
pepy Posted October 31, 2015 Share Posted October 31, 2015 Yes, I think that money management is the most important and an aspect which trader should think first rather than others like profitable strategy. Other than that, money management can reduce risk of trading and for sure we can trade in relax manner if we lose less or in approriate amount. Quote Link to comment Share on other sites More sharing options...
myregister Posted November 8, 2015 Share Posted November 8, 2015 I think a trader should trade carefully, never let their emotion above them and control it. In this case Risk Management also important to create a better environment. RM or what in this thread called as Money Management will let a trader to control how much money they want to spend and calculate how much risk it could bear. Quote Link to comment Share on other sites More sharing options...
pepy Posted November 14, 2015 Share Posted November 14, 2015 The real deal without doubt is risk/money management, it is the most important one. I agree with you myregsiter it will create better environment for trader, with calculating the risk we can avoid so much loss, yet this will affect our trading because less loss means bigger chance for profit. Quote Link to comment Share on other sites More sharing options...
myregister Posted November 15, 2015 Share Posted November 15, 2015 Yes, one of the important part in forex trading which many newcomers forget, only pursuing for profit won't make us able to survive in forex trading but that might make us lose more than that. I usually give some advice to people who interest in forex to think about the risk first, because with learn money management they able to learn about the risk that forex offers. Quote Link to comment Share on other sites More sharing options...
pepy Posted December 10, 2015 Share Posted December 10, 2015 So, to conclude this all money management is the real deal and the real risk management. Once you fail to manage your money in proper manner you won't even recover your money or the bad part cannot recover your account. This is not good condition for any traders, isn't it? So make sure you have set of rules to help you manage your money, because this is more important that those profitable strategy. Quote Link to comment Share on other sites More sharing options...
myregister Posted January 31, 2016 Share Posted January 31, 2016 Sure it is a real deal in forex, not to mention it is also the reason why many traders are able to survive up to now, without a proper risk management a trader may lose their chance so quickly, and forex would be a very "wild" place for many traders around the world. Risk management or money management is the most underrated techniques or strategy in forex. Quote Link to comment Share on other sites More sharing options...
pepy Posted March 14, 2016 Share Posted March 14, 2016 I also agree if we put that way, money management is important since it is what decides trader whether they will be survive or insted lose more bucks on the way. And this thing is also important so the trader can act carefully especially when use their capital thus lowering the chance to lose Quote Link to comment Share on other sites More sharing options...
Vaabum Posted April 22, 2022 Share Posted April 22, 2022 Knowing how to properly manage your money is extremely important. This is really important and really needs to be taken seriously. Quote Link to comment Share on other sites More sharing options...
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