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Business : There Are 3 Factors To Consider For Your Money Management Plan
Trading Forex is one thing different from trading for a living. We may all trade Forex but not all of us will trade long enough to call it their career fortune. The reason for this difference is in our chances of surviving in the market. Get one point clear here: the market has seasons and cycles that may work well for all of us at one point but once a favorable season is over, every move becomes unpredictable and the risk of losing trades goes up. This is where real traders are separated from opportunist and only the fittest will survive.
Your chances of surviving throughout all seasons of the market depend with your money management plan. Here there are three factors at play namely: Exposure, success rate and return on investment ratio. Each of these factors is well explained here:
Exposure
This is the amount of money from your account margin that you let to hold a trade position in the market. Your exposure, better expressed in percentage, should never be more than 1% for any given single position on the market. This figure should be even smaller if you are less experienced in trading Forex. However, each trader is unique and has a different risk appetite as some traders are highly tolerant to risk and others are very risk averse.