Forex Money Management Strategies 

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clararobert
Posts: 170

Joined: 12/5/2018
Topic  Forex Money Management Strategies       Flag »  Reply »
It seems that every time I look Auto Chat Profits for good information on Forex money management I am given an explanation of how it keeps your risk under control. While every trader needs to control risks, that is far from being the whole picture.You see, the whole reason people get involved in speculative markets in the first place is to obtain a better ROI (Return On Investment) than they would using more conservative investments such as CD's, Bonds, or mutual funds. This means that you are interested in speculating in the Foreign exchange markets because you are seeking above average or well above average returns, right?

One big reason that the currency market is perfect for speculation is the level of leverage. Naturally, leverage makes it possible to grow your money faster than if you used no leverage at all of if you were buying stocks on margin with a conservative 2:1 leverage. What money management does is give you an additional type of leverage by making your money work more efficiently for you.

The best way to illustrate the power of money management is through an example. We will use two fictitious traders named Peter and Paul.Paul decides to use the EURUSD as his financial instrument of choice. Paul's system is good and he makes $1,000 per trade starting with a $10,000 account. Paul trades 1 contract per trade for a total of 30 trades. His total equity is now his original $10,000 starting account balance + 30 x $1000 profit = $40,000. Without going into great detail we can simply say that Paul is doing well.
  Wednesday, January 23, 2019 at 4:52:34 AM

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