Forex capital management.

There are only a few key aspects in trading that govern the entire exchange trading process. One of these aspects is capital management.

Capital management in Forex is a smart approach to distributing funds and taking timely measures to preserve them. In financial matters, most money management recommendations apply to long-term trading, but with the right approach, they can also be applied to day trading .

Any capital management strategy is highly individualized, and its development should take into account both the amount of funds at the trader's disposal and the specific situation in the Forex market.

However, two universal options can be developed: the first is designed for traders with a modest deposit of up to $500, and the second is for more affluent investors.

Option #1:

You only have $100 in your account and are wondering why you need to manage it. But you need to do so for several reasons: you're hoping to grow this amount, and additional skills won't hurt. Secondly, even when trading such a small amount, you still need to diversify your funds.

Capital management with a small deposit:

1. Trade sizes no more than 30% of available funds.
2. Mandatory reserve for unforeseen circumstances outside the working account.
3. Stop-loss per trade no more than 20%. This means losses on a single open order should not exceed 20 percent.

Translating all of the above into absolute numbers yields the following: A deposit of $100, $30 of which is in a reserve account, and $70 used for trading. Using leverage , open a trade of 0.02 lots, which will be closed if the loss does not exceed $4.

When trading small amounts, remember that your goal is not to make money, but to learn how to trade, so don't expect large profits at first. If you still can't wait, use deposit acceleration.

Option #2

: If your deposit exceeds several thousand dollars, it's more realistic to maintain an optimal balance between risk and profitability. The rules for forex capital management are slightly modified compared to the previous version.

1. The reserve of unused funds is approximately 50%.
2. 10-15 percent of the total funds are used in each trade. This will not only preserve the deposit but also allow for opening new positions .
3. Losses from a single trade should not exceed 5-10%, and unprofitable orders should not be held for too long.

You can modify these points to suit your strategy, but the main thing is to integrate capital management into your trading.