Forex Secrets at Forex Trading Guide

Main Forex Secrets sponsors

Forex Secrets

Welcome to Forex Trading Guide

Article

Are These Simple Trading Mistakes Costing You Money In The Forex Market

David Jenyns

The 2% rule is a powerful tool in Forex trading. By adopting this rule you're using a strategy that decreases the size of your losses during losing streaks, an important consideration. There is, however one small caveat that you need to be aware of when using the 2% rule to calculate how many Forex shares you are going to buy. As you know, the number of shares you can purchase is determined by your maximum loss and the size of your stop. This means that by increasing your risk, you can also increase the dollar value of the position you open. By simply shrinking your stop size, that is by setting a tighter stop loss, you can increase the dollar value of the position you open.

To avoid a situation where you could end up with excessively large positions that may put your Forex trading float at risk, you can choose to introduce an extra rule. This rule would limit the dollar value of a position to be no more than a set percentage of your entire Forex trading float.

For example, you might decide that you'll never open a position that has a dollar value of more than 25% of your entire Forex trading float. This rule would only be executed if, after calculating the formula that determines how many shares you buy, you find the dollar value of that position would greater than 25% of your float. If this happened, you would scale down the position to make sure it did not exceed that 25%.

The percentage that you decide upon will depend on the type of system you're trading, the size of your float, and your personal tolerance for risk. Generally, smaller Forex trading floats might use 25%, and larger Forex trading floats might use as little as 10% or even 5%. There are no definitive numbers, and the percentage that you choose will depend on your personal circumstances.

Once this tendency is corrected for you will have all your money management rules in place, ready to control your risk in the Forex market. Now you need to take the next step. Test your system to find out which of the variables best suit you, remembering always that position sizing is the most significant part of any system design. It is the lynchpin of money management. Once you've tested your system, and fine-tuned your rules, you will be well on your way to becoming a successful Forex trader.

About the Author

Discover BIG profits from the market by downloading your FREE copy of David's new Ultimate Stock Trading Systems course. http://www.ultimate-trading-systems.com/forex.htm

Forex Secrets News

forex secrets

Go to the new RSS page and renew your subscription.]]>

IMPORTANT: Bing News RSS feed has moved!

Michael Greenberg has been named “Forex Person of the Year” by FXstreet.com for his impressive, original and respected work with Forex Magnates and for making the industry more professional, more comprehensible and in the end... better.

Michael Greenberg, FX Person of the Year 2011

Automatic Forex trading techniques and software allow merchants to complete business enterprise with out receiving any emotion or psychologically involved together with the business. It could aid those people that are starting to understand and understand ...

The Secrets Behind Automatic Foreign Currency Trading Programs

Technical analyst Christopher Weaver has spent extensive time trading and studying the trends and movements of the foreign exchange market. With his new book, 4 Keys to Profitable Forex Trend Trading, available via Harriman House, Weaver aims to teach that ...

Christopher Weaver's New Book Offers the Secrets to Profitable Forex Trading

For these purposes "Intellectual Property Rights" includes the following: any patent, trade mark, trade name, service mark, service name, design, design right, copyright, database right, moral rights, know how, trade secret and other confidential ...

BULLION MORNING - Gold extends gains, sentiment positive ahead of US jobs data

Forex While You Work...Finally ... Once you enter the trade, it will be set and forget. The secret of big bank traders...Do you know how most bank traders trade? Their "bread and butter" timeframe is the four-hour chart. Yep, the higher timeframes are ...

Forex While You Work System Is A Set & Forget System For Those Traders Who Work During The Day!

“It was the market’s worst-kept secret that France was due a downgrade," says chief economist Jeremy Cook from World First. “French debt has been trading like the debt of the periphery for the past couple of months now, with yields rising over the ...

Forex focus: ratings downgrades 'like a scene from a horror film'

Learn the secrets of the Global Macro titans ... Facebooks and so on. A schizophrenic forex market. The U.S. dollar is the Rodney Dangerfield of currencies — it gets no respect. And yet, the euro is a basket case, the yen is a demographic timebomb ...

Living in a Zero Percent World

It is no secret that the Germans have a trade surplus that make thealready red Chinese blush (OK I know that was a little corny but tough toresist). In fact if you go back to 2008 when global trade went into atemporarily state of collapse the ...

Euro Correlation Part II

It is no secret that direct subsidy payment and unbridled corruption ... can accrue additionally to government from reduction of debt service charges! Such deregulation of the forex market will also intrinsically deregulate the fuel market, without ...

Forex Trading Guide - Forex Secrets Section

Forex Secrets Navigation

2005 Best Seller!

Best Forex Secrets products