Focus On Forex Money Management For A Success Boost
The more contact you have with people wanting to be profitable Forex traders, the more you find out that the road to Forex riches is difficult and long for some people. Everyone thinks they are doing things the right way and on the right track. But the fact is, most people understand what they need to become successful Forex traders, but they are going about it in the wrong order.
This article will tell you not only what you need to do, but also the correct order to do it in. There are 3 elements you need to be a profitable Forex trader, the trading system, traders psychology and money management. The problem is, most people focus on these elements in the wrong order if they want to be successful fast. As a matter of fact, doing things this way takes so long, that not many people reach their goals. I cannot stress this enough, the order you focus on these elements makes all the difference.
Most people think they should focus on the trading system first. After all, if they have the “best” trading system, developing the correct traders mindset and money management should be easy. The problem is, there is no perfect trading system. So, what happens is people get caught up in an unending quest to find the right trading system instead of finding a system that gives them an edge and practicing it until they can trade it profitably.
The truth is, you should focus on money management first. Most courses, products or services you might have used probably skip over this element of trading very quickly. They either just tell you to use proper money management without explaining what that is, or say something like only use 1% to 2% of your account per trade. This is not going to help you, and can lead to putting too much money at risk and losing your shirt.
Think of it this way. The casino business puts money management first. They only have games in the casino that mathematically give them an edge. While they don’t win all the time, they know that if people keep playing, statistically they will come out ahead. And they make a lot of money just because they have this mathematical edge.
Proper money management for a Forex trader should give you the same kind of mathematical edge. If you apply the money management system correct, you should come out ahead in the end. Unfortunately, most traders don’t use this kind of money management, so it is no wonder why most Forex traders lose money or struggle to make their winnings worth the trouble.
If your money management gives you a mathematical edge in the markets, the trading system you use becomes secondary. As a matter of fact, you only need a decent system to see profits. And a decent system is a whole lot easier to find than a “perfect” one. And when you have this money management edge and a decent trading system, traders psychology becomes a snap because it is a whole lot stressful.Focusing on how much money you can lose and controlling risk sets the stage for success. Sure, it is not as exciting as talking about how much money you can make… but it is never the less the most important aspect of trading. Get your money management and expectations correct, and you’ll find plenty of trading systems to meet your needs.
Edward Lomax is part of the Forex Investing Live Team, dedicated to helping people tap into the true wealth creating opportunity the Forex Market provides. Register for the Forex Investing Live Free Membership and get Free EURUSD signals, Free Forex Investing Battle Plan Course and Ongoing Training. ForexInvestingLive.com