Why Money Management is crucial in Forex

by on 14. Sep, 2009 in Forex Videos

If you’re looking to be a successful Forex trader your first priority needs to be to cut the risks, not to make money. Here’s a video that explains why money management is crucial in Forex.


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5 Responses to “Why Money Management is crucial in Forex”

  1. adegbuyi 14. Sep, 2009 at 5:53 pm #

    very interesting and educative,the only problem investor like me have 4 a long time,infact i have a long relieve when i went trough the tutoria.my question how can one get a system that would suite him?just like the one u just showcase and how to apply it. thank you very much i m gratefull .pls i need more lecture.and i want to have in in my system so as to play and play to digest it into my system rather play before enter a trade.

  2. Aboddahab 15. Sep, 2009 at 12:29 am #

    Thanks alot.
    It’s really so usefull lesson

  3. Admin 25. Sep, 2009 at 4:31 am #

    Hello adegbuyi,

    There are only 2 ways to get a system that suits you for the long term: buy a good system and change it (adjust for example the stop losses and apply solid risk reward rules) or develop your own system from scratch using technical analysis.

    This task won’t ever be completed since you need to keep adjusting your own system to the current market environment. It’s a task for live that ultimately pays off.

  4. Farhan 26. Mar, 2010 at 8:35 pm #

    It is an very good lecture, infact excellent. I love your blog @ Admin. Provide alot of educational stuff and you have very good selection of books, videos & articals.

    When I start trading I become very greedy, I only use to accept profits and when I face losses I continously change my stop loss limits, after a month I bound myself in Euro/Jpy deal and loss all my money because I was hoping that it will bounce back but losses all my money because of low margin.

    Now, As mention in this video I alway set my loss to 1.5% – 3% ( 15 – 30 Pips ) depend on the market conditions some times I make big profits through that otherwise small losses,

    Here is little example, if you don’t mind @ ADMIN.

    Lets suppose I do 20 deal in a Month and for each deal I set my Loss to 20 Pips and profit to 100 Pips.

    If I losses 50% my trades ( 10 Trades out of 20 ) then my loss will be.
    10 X 20 = 200 Pips / Month

    And if my 50% deal reached that target then my profit will be.
    10 X 100 = 1,000 Pips / Month

    So the Net Profit = Profit – Loss
    ……………………….. = 1000 – 200 = 800 Pips / Month

    So after lossing 50% of my trades I still made 800 Pips :) ).

    Similarly if I loss 15 trades and win only 5 trades then still my profit is 200 Pips above then breakeven.

    Regards,

  5. Admin 27. Mar, 2010 at 8:03 pm #

    Good job Farhan.

    Having a good risk / reward and using money management are 2 important keys to succeed in the Forex market.

    Good Luck!

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