Introduction
An important point of the online FOREX trading education is money management. This refers to the method used by the trader to control the flux of money entered and released from the account. Money management is a strategy that depends on the appetite for risk of the trader. The experience of traders in online FOREX trading leaded to some money management strategies that are generally available for any person that wants to be successful in online FOREX trading.
Step 1
Only risk a small percentage of your account. The major players establish greater limits of loses compared with the rest of the market, but this is only possible in the case of a big account that can easily resist to a major loss. In fact, the secret of a smart online FOREX trading strategy is not to compromise your account.
Step 2
Reconstructing a damaged bankroll is harder than you would expect. Considering the decreased value of the account, the effort needed to rebuild your account is huge. The biggest mistake of the beginner traders is that they will become nervous in those situations, leaving the strategy and trying to hit the jackpot using rumors of the market. Don’t fall into this trap, as the majority of losers in the market made this mistake at least once. If your account was compromised, try to build it using smart strategy, and remember that panic is the biggest enemy of the online trader. Online FOREX trading is a psychological battle, and only the strongest traders survive.
Step 3
Calculate the win/loss report before entering the market. If the winning chances are small, it is better to stay away from the respective contract, or to enter with small sums. This way, you won’t feel sorry for losing, and in the case you win, the potential earnings are huge. The advanced online FOREX trading platforms give you the possibility to calculate your chances of winning or losing certain transactions, and those are useful instruments in the arsenal of a trader.
Step 4
For example, if you want to enter on a transaction with Stop Loss of 30 pips and Take profit of 30 pips, the situation puts you into a bad risk management situation, as the potential risk is huge compared with the potential winnings of this transaction.
Step 5
Before entering a certain market, it is better to establish a won/loss rating of 1/3, so that you can afford to lose one unit for three potential winning units. This is one of the base online FOREX trading strategies that must be considered by any trader.
Tips
As a conclusion, it is better not to risk so much for a single transaction, and if you were not sure about the evolution of the market, you would better stay away and wait for the market to show you better winning opportunities. Be sure you have mastered all the resources given by the online FOREX trading site and find only the safest entering options in the market. In any case, don’t try to cheat or to use exotic trading methods recommended by “specialists.” The traders that are consequent and they follow the plan accordingly are the ones who make real money on the FOREX market.
