Im new to forex and have been reading alot, everywhere I read regarding money management always says only risk 3%…what does that mean?..say I have $1000, 3% is $30, so I can only risk $30?..when I lose more than $30 I stop trading?
thanks
Money management is an essential tool to complete a solid trading plan. What you illustrated was just one example of money management. A variance would be to risk 3% per trade.
The percentage to risk is also up for debate. Some say 2%, others say no more than 5%. It’s what you feel most comfortable with.
It means that in this scenario your stop loss should be no more than -30 dollars.
3% loss for anyone one trade only allowed, that is what that means.
If you are going that route keep in mind that, that is 3% of your current balance. So, with a win or loss re figure what 3% is, for the next trade. If you don’t then you are actually compounding losses.
This right here
I prefer to use 2% myself