This is only the first rticle from a cycle of clauses which urged to help to avoid to beginning traders the basic errors in trade and to teach to supervise risks with which Internet trading is connected.
Money Management Rules or capital management rules are those base principles of trade which should be observed irrespective of trading strategy applied by the trader, the tool or trade time. It is said that trade without observance of rules of capital management is a same roulette. Therefore to begin with we will try to explain on an example what for capital management at trade in the market Forex is necessary.
Let’s abstract from trade on Forex and we will present that we watch the football game. One of commands is very well organized in defense, doesn’t allow to the contender to break and score a goal. Yes, not that this command will manage in the fact most to hammer much, but to leave gate dry is already an art. Smart management by the capital also, unconditionally, is an art. Each football trainer dreams to have a command with good defense which becomes pledge of the future victories. Trade in the exchange market assumes the same principles, therefore make capital management a part of your forex strategy.
Currency trade means that if we lose 50 % of the deposit to return to former level it is already necessary for us to win back all of 100 %. To catch a trend in the market simply, however it is difficult to use it to the full. So, to begin with you should remember following rules:
Don’t begin with the big credit shoulder
Don’t use at first a credit shoulder more than 1:100. You should understand that the greater credit shoulder is the above is risks of loss of the deposit. Many brokers are ready to offer a fabulous shoulder to 1:1000, however don’t forget that with shoulder growth your risk grows also to lose means. Also it is possible to start to trade from fractional prizes.
Don’t place postponed warrant Stop Loss too close
Consider noise and market volatility at placing a Stop Loss. Too close placing of stops doesn’t warrant safety but only increases probability to be stopped. Give as much as possible time to statement of the postponed warrants. In the future the received skills only will help you.
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