If you ask the pro traders what is the secret of their success the answer of the majority traders will be by maintaining a strict and effective way of managing the money and risk. If you don’t maintain the risk for per trade properly then you won’t be able to make money even after using the best strategies in your trade. Some of you might think you can trade the market by buying an expensive trading system from the pro traders in Singapore. But if this was true, no one would have lost money at trading. Every trader needs a unique strategy that can suit their personality. No matter how hard it is, you should never try to use the purchased trading method even though it has a very high success rate.
In the Forex market, you need to pay attention to every tool to trade profitably. Management is the prime factor you need to maintain to make money in the market. Today in this article, you will learn some tricks that will help you with your money management.
Identify your risk for per trade
The amount of risk you are taking on a single trade is known as risk per trade. If you don’t pay attention to your risk per trade then you will lose trades constantly and soon you will blow your account. If you are new in the market, you should keep at least 1:2 as a risk-reward ratio. But try to execute the trade in the Forex trading account with a higher risk-reward ratio. But to do so, you need to think like the elite traders at Saxo. They always prefer trading the daily time frame since it helps them to secure high risk to reward ratio trade setups.
If you can manage the risk per trade is 2%, you will be able to make money profitably in spite of losing in a few trades. Try to identify the risk per trade that will work in your favor and maintain a plan to execute your risk per trade.
Use a stop-loss order in your trade
A stop-loss order helps to lower the chance of losing money. You can limit your losses by using the stop-loss order. Many traders use the stop-loss order so that they don’t have to look at the screen for the whole day. Consider stopping loss as your protective shield. If you can develop the habit of using stop loss all the time, you won’t have to blow up the trading account.
Whenever you use a stop-loss make sure you set the order based on the price action and market conditions. Never place the stop loss order base on your thinking, it’s important to set the stop loss according to the market.
Use the leverage accurately
If you are new in the market you will notice many Forex brokers are offering high leverage but without any certain reason don’t accept those offers. Leverage is important in the market as in a day most of the currency pairs move less than1%.
If you don’t want to lose a large amount of money, use leverage wisely and determine your leverage according to the stop loss.
Don’t be emotional while trading
Mostly new traders face emotional intelligence while trading if they fail in the trades constantly they lose hope and quit the market. In the Forex market, you should not let your emotions control over you, instead of focusing on the losing trade you should use plans and strategies to make profits from the nest trades.
Always analyze your trading plan now and then to work more progressively. Money management is an important technique to understand when you should trade in the Forex market. If you maintain a proper money management plan, you will make money without any hassle. Though it may take time to learn about the money management system.