Are These Simple Trading Mistakes Costing You Money In The Forex Market
Are you using a sensible risk management rule? If not, hold everything and have a read of this article on risk management. If you follow proper risk management, then you'll be able to survive the losing trades easily and go on to take the winning trades that make trading profitable, and keep trading. If not, you may lose your float and that's the end of your trading - simple as that! "There are old traders, and there are bold traders. But there are very few old bold traders" is a saying by Ed Seykoda, a very wise saying indeed. [Editor's note]
The 2% rule is a powerful tool in Forex trading. By adopting this rule you're using a strategy that decreases the size of your losses during losing streaks, an important consideration. There is, however one small caveat that you need to be aware of when using the 2% rule to calculate how many Forex shares you are going to buy. As you know, the number of shares you can purchase is determined by your maximum loss and the size of your stop. This means that by increasing your risk, you can also increase the dollar value of the position you open. By simply shrinking your stop size, that is by setting a tighter stop loss, you can increase the dollar value of the position you open.
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