Forex Money Management

Forex trading comes with its fair share of losses, making it crucial to have a strong Forex money management plan in place. Successful Forex traders typically have an 80% success rate, implying that out of every 100 trades, they win 80 and lose 20. Their money management plan is tailored to account for the worst-case scenario – losing 20 trades consecutively.

If you’re a Forex trader, using a stop loss of 30 pips and trading at £1 per pip exposes you to a risk of £30 per trade. To weather a potential slump, you need a balance of £600. This translates to the recommendation against risking over 5% of your trading balance. For beginners, sticking to a trading balance of 2-5% can be hard. However, it’s essential to test your Forex money management plan alongside your trading system to ensure they work together. A demo account can come in handy for testing purposes.

Written by Adam Woods

Leave a Reply