I meet a lot of forex traders and they all seem to believe that finding the perfect trading strategy will make them rich. They blast charts with technical indicators, trying to anticipate the market’s next move. Well, unfortunately, you will never know the market’s next move before it actually happens. You can never know if your trade is going to work or not. So what you should do to keep your balance grow? Money management. You need to have the ability to manage your trades in a way that your losses will be less than the pips you gain. How can you do that? There are several money management strategies but I think that keeping these 3 golden rules covers 80% of any money management strategy:
- Cut loses while they are still small.
- Know you TP targets before you enter the markets and take the profit when the price get there.
- Make sure that the potential profit of a trade is higher than the potential loss. My minimum ratio is 1 to 1.8. So if you put your energy in finding the perfect trading strategy- know that without money management it will be pointless.