Money Management

Hello everyone,

I know I’m pretty new to the forex world but I’ve browsed around and must say that this site is probably the best resource for beginners. I’m sure there are plenty of other sites but maybe I just haven’t found them yet. It’s also good to know that there is a large community out there that is willing to help.

Ok, enough ranting. My question is that I’ve browsed many forums and I keep hearing traders mentioning good money mangement. Is there a book or ebook that teaches good money management?

Thanks for your help in advance.

Money management is how much money you risk on each trade and how much of a loss you are willing to take on a trade.

For instance, most traders do not risk more than 3% - 5% on any one trade. Me personally, I never trade larger than 1% of my account on any single trade. Money management is a great skill to learn in the event you have a string of losses you can keep the drawdown to a minimum.

You should read Dr. Alexander Elder�s Trading for a Living.

It cover money management in depth.

If you wait a couple months, his new book “The Complete Trading for a Living” comes out soon for $40. It combines Trading for a Living and the Study Guide which would sells separately for $120.

The following factors should help to calculate the risk percentage.

  1. Margin
  2. Lot size
  3. Number of lots traded
  4. Target profit
  5. Account balance

Read some of Ralph Vince’s books, IIRC the titles are “the trading game” and “the mathematics of money management”

you might also want to check out van tharps report on MM

all of the above are in ebook format and esaily findable.

How did this thread pop up again. It was started in '06

I started it again when I first resgistered earlier this month. I am new to Baby Pips.