Forex Trading Guide - Forex Trading Solutions Section

Main Forex Trading Solutions sponsors

 

 

Welcome to Forex Trading Guide

Article

The Sneaky Way To Managing Losses In Your Forex Trading
David Jenyns

One of the cardinal rules of Forex trading is to keep your losses small. With small Forex trading losses, you can outlast those times the market moves against you, and be well positioned for when the trend turns around. The proven method to keeping your losses small is to set your maximum loss before you even open a Forex trading position. The maximum loss is the greatest amount of capital that you are comfortable losing on any one trade. With your maximum loss set as a small percentage of your Forex trading float, a string of losses won't stop you from trading. Unlike the 95% of Forex traders out there who lose money because they haven't applied good money management rules to their Forex trading system, you will be far down the road to success with this money management rule.

What happens if you don't set a maximum loss? Let's look at an example. If I had a Forex trading float of $1000, and I began trading with $100 a trade, it would be reasonable to experience three losses in a row. This would reduce my Forex trading capital to $700. What do you think those 95% of traders say at this time? They would reason, "Well, I've already had three losses in a row. So I'm really due for a win now."

They would decide they're going to bet $300 on the next trade because they think they have a higher chance of winning.

If that trader did bet $300 dollars on the next trade because they thought they were going to win, their capital could be reduced to $400 dollars. Their chances of making money now are very slim. They would need to make 150% on their next trade just to break even. If they had set their maximum loss, and stuck to that decision, they would not be in this position.

Here's a perfect illustration why most people lose money in the Forex trading market. Let's start out with another $1,000 float, and begin our Forex trading with $250. After only three losses in a row, we've lost $750, and our capital has been reduced to $250. Effectively, we must make 300% return on the next trade and that will allow us to break even.

In both of these cases, the reason for failure was because the trader risked too much, and didn't apply good money management. Remember, the goal here is to keep our losses as small as possible while also making sure that we open a large enough position to capitalize on profits. With your money management rules in place, in your Forex trading system, you will always be able to do this.
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 Trading Solutions News

forex trading solutions

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

IMPORTANT: Bing News RSS feed has moved!

Hong Kong, Hong Kong (PRWEB) January 23, 2012 InvestTechFX is a leading forex ECN provider that has always employed innovative e-trading solutions while providing clients a well engineered and secured site. In this day and age, online forex trading secure ...

Secured Online Forex Trading – The Latest Online Security Information

The Friday afternoon squeeze is on as hopes for Greek solution and weaker GDP lead to the dollars decline. In Greece the comment from a spokesperson is there is one step left for an agreement. At the same time the word is a 2nd bailout may be ...

Forex Trading: EURUSD Makes New Highs…

Forex or FX for short, foreign exchange trading is one of the most widely traded markets in the world while all the major currencies trade against the US Dollar. Here, FX Solutions gives a beginner's guide to forex trading and the integrity of ...

A Beginners Guide to Forex Trading and the US Dollar

Advanced forex trading functionalities include Touch-Chart-Trading ... which has been developing real-time trading solutions for financial institutions and professional traders for the last 11 years. Rodolfo Festa Bianchet, Riflexo’s CEO, is among ...

Trade Interceptor released Kindle Fire forex trading App for currency investors

Clients of FXOptimax are now able to take advantage from hundreds of forex trading strategies available from ZuluTrade. Coupled with FXOptimax tight spreads and fast Straight Through Processing execution, and ZuluTrade strategies will certainly provide ...

FXOptimax Adds User Friendly AutoTrading Solutions

As part of the companys broader 2012 strategy to deliver market leading automated forex trading solutions and education to its clients IC Markets also acquired a Virtual Private Server (VPS) provider in Australia. Managing Director of IC Markets said ...

Leading Australian Forex Trading Broker IC Markets Ends a Record 2011 Year

PSI talks will promise to catch investors’ attention in the European trading hours. Yesterday’s session showed some signs that maybe the negotiations could be stalling, with Greek officials now looking to February 13 to deliver the solution package.

Forex: EUR/USD flat before European session

The only solution they have is to play against the client ... Article was written by Alexander Collins, who is a creator of Forex robots and blogger. Also find out Forex trading tools for better Forex trading on Alexander’s blog.

ECN Vs. The Market Makers: Who’s The King Of The Hill?

InvestTechFX, who provides the 0.5 fixed trading, also mentioned that the EU ... InvestTechFX as the leading software solutions firm offering a 0.5 PIP fixed spread on 6 major Forex currency pairs. InvestTechFX works directly with a clearing partner ...