Money Management

 Before you start to trade Forex you need to understand, your tolerance is to drawdowns or losses and this trading tip is all about this key point. While its not discussed much online and many traders never even think about it, understanding it and its impact is one of the keys to long term trading success.

Forex trading is as much about dealing with losses is it is about dealing with losses correctly. You will have periods of drawdown and they will last for trade after trade so how do you deal with them and how do you work to get your equity back to new highs? Lets look at this aspect of money management in more detail.

Never risk 2% on any trade, is a commonly accepted currency trading tip. You will often hear as sound investment wisdom but if you want to achieve really great gains in the Forex market forget it, the trading tip is nonsense. The logic behind it is flawed and will ensure you never make great profits on your trading account.