Forex money management.

In trading, there are only a few important points that regulate the entire process of trading on the stock exchange. One of these moments is money management.

Money management in Forex is a competent approach to the distribution of funds and timely implementation of measures to preserve them. In finance, most money management recommendations relate to long-term trading, but with the right approach they can also be applied to intraday trading .

Any money management strategy is purely individual; when creating it, you should take into account both the amount of funds at the trader’s disposal and the specific situation on the Forex market.

But with all this, you can create two universal options, the first of which will be designed for traders with a modest deposit of up to $500, and the second for wealthier investors.

Option No. 1

You have only $100 on deposit and you are wondering why manage it. But this needs to be done for several reasons - after all, you expect to increase this amount and extra skills will not harm you, and secondly, when trading even such a small amount, you still need to diversify your funds.

Money management with a small deposit:

1. The size of transactions is no more than 30% of the amount of available funds.
2. Mandatory reserve for unforeseen circumstances outside the operating account.
3. Stop loss for the transaction is no more than 20%.

That is, losses on one open order should not exceed more than 20 percent. That is, if we translate everything written above into absolute numbers, we get the following picture. Deposit 100 dollars, 30 of them are in the reserve account, 70 are involved in trading. If a leverage of 1:100 is used, then we open a trade with a volume of 0.02 lots, which will be closed with a loss of no more than $4.

When trading small amounts, you should remember that your task is not to earn money, but to learn how to trade, so you should not count on big profits at first.

And if you still can’t bear it, use deposit acceleration. Option No. 2

If the deposit exceeds several thousand dollars, it is more realistic to maintain the optimal balance between risk and profitability.

The rules of money management in Forex change slightly compared to the previous version. 1. The reserve of unused funds is about 50%.
2. One transaction involves 10-15 percent of the amount of funds, this will allow not only to maintain the deposit, but also, if necessary, to open new positions .
3. Losses from one transaction should not exceed more than 5-10%; you should not delay maintaining unprofitable orders.

You can independently change the above points in accordance with your strategy, but the main thing is that the very fact of money management on Forex is present in trading.