Money management is one of the most important factors that separates a professional trader from an amateur one…it becomes more crucial if you make leveraged trades..Traders can be a victim of big losses even if they follow a good trade..So it is for traders’ benefit to stick on money management rules..These rules seem to be very easy to follow in theory but the the greediness of human nature hardly allow us to do so..
First, make your investment with the money that does not impact your life.. Investing is taking some of your money and trying to make it grow by buying/selling things you think will increase/decrease in value. Since there is always a possibility of a potential loss,we have to choose a number that will not hurt our life. Investments should be made only with the speculative capital.
Second, Do not insist on your mistakes..It is very crucial to use stop-loss in your trades. Facts may change very rapidly,especially in fx markets.. By using stop-loss you can exit your trades without suffering huge losses…If things are changed,there is no need to get sticked on mistakes..As wise man said, ”No one can trade against markets…”
Third,Do not fire off all of your bullets at once.. Do not enter trades by using all of your money..Instead,divide your balance into 2 or 3..Keep in mind that even if you are on the right track,because of the volatility, prices may go in reverse direction for a while and then correct itself only after a period..If you spend all of your bullets, these fluctuations can be your devil..Instead,use these fluctuations as an opportunity to lower your trading costs.