Forex Trading Guide                       Bookmark This Page

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 News

Forex trading

TOKYO, Jan 6 (Reuters) - Japan's Nikkei average rose 0.3 percent on Tuesday, buoyed by exporters such as Canon Inc on a weaker yen and hopes for economic stimulus steps by the U.S. administration taking office later this month. Toyota Motor Corp ...

Nikkei up 0.3 pct on yen, hopes for US econ steps - CNBC

Jan 06 - Forex Market Update: Dollar Extends Gain Against Euro and Pound Jan 06 - Overnight Interest Rate Update 01.06.09 Jan 05 - Euro Tumbles on Dovish ECB Comments, Euro-zone CPI Could Exacerbate Sentiment on Tuesday Jan 05 - British Pound Shows ...

Forex Market Update: Dollar Extends Gain Against Euro and Pound - DailyFx

Jan 05 - Forex Trading Signals Well-Positioned for Gains in the New Year Jan 05 - Euro Zone Investor Confidence Likely to Shrink As Recession Deepens (Euro Open) Jan 05 - Identifying Trades with DailyFX 01.05.09 Jan 02 - A Rebound In Liquidity May ...

Forex Trading Signals Well-Positioned for Gains in the New Year - DailyFx

An increasing number of people are now turning to forex trading as a means of generating revenue. However there is a lot to learn, so with that in mind, here are some of the basics you should know before you even think about trading forex with real ...

A Few Things You Need To Know About Forex Trading - Best Syndication

cent upmove twds 0.7062. Sell at market for this move, stop as indicated, abv prolongs choppy trading n risks gain to 0.7161. Published On Tue, Jan 6 2009, 05:54 GMT Forex Market Outlook on Minors/Crosses Published On Mon, Jan 5 2009, 04:11 GMT Forex ...

Forex Market Outlook on Minors/Crosses - FXStreet.com

A couple weeks ago I wrote a piece that compared the Spot Forex market to the Forex Futures. It recently dawned on me that the piece was really written to an audience that already has some knowledge of Forex. Today, let's discuss the basics of this ...

A Basic Understanding of the Forex Markets - FXStreet.com

Veteran Turtle Trader, Russell Sands, Will Auto-Trade For You. $6K Minimum. 100% Guaranteed. Automate Your FOREX Trading and Explode Your Profits TODAY! Double Your Money Each and Every Month. FAP Robot Eliminates the Guess Work in FOREX Trading ...

Forex News Trading - Colleyville Courier

Forex scalping is basically where you target lots of small price moves over the course of a particular trading day. It is quite a popular way of trading currencies but the drawback is that you will face a number of potential problems. The first ...

Forex Scalping - Some Potential Problems You May Face - Best Syndication

Find providers of forex in our directory. Automate Your FOREX Trading and Explode Your Profits TODAY! Double Your Money Each and Every Month. FAP Robot Eliminates the Guess Work in FOREX Trading! Make Money 24/7 Without RISK

Forex Calculator - Colleyville Courier

TOKYO, Jan 5 (Reuters) - The dollar held firm near a three-week high against the yen on Monday as risk appetite picked up after Tokyo shares followed Wall Street higher on hopes for a recovery in the U.S. economy later in the year. In choppy trade ...