Money And Risk Management In Forex Trading

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Figure 20.4 High performance trading opportunity

21. Money and Risk Management Besides following a solid strategy, management of money and risk in Forex is the most important factor that determines the outcome of your trade. Management of money is about the portion of your equity (or balance) you risk on your open trades. In any case (except for optimal trading), you are not allowed to expose more than 3% of your equity to the market. Because of high risk of Forex trading (even with proven strategies), putting more than 1/30 of your equity (or balance) in the open trades increase the chance of fast drawdown of your equity and losing all your money. Risk management in Forex is about taking measures to prevent big unaffordable losses. The simplest but most effective tool to control (or limit) your risk in a trade is

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