Do you have a Forex money Management plan? If not, you might be missing out on the opportunity to maximize the value of your trading account funds!
AtoZMarkets - Trading in Forex does not only require sufficient amount of knowledge and experience. A successful Forex trader will want to assure that the funds he/she invested are going to bring maximum profits. In other words, every trader needs a proper Forex money management plan.
Forex money Management plan
Still, how can you assure that your funds will bring you the best trading opportunities and value? When you start placing orders in Forex market, you cannot miss out on the trading strategy. A precise and detailed plan is what you need.
However, the three steps below are just the guidelines for you to start. Every trader will have certain factors affecting the strategy from the personality perspective. Thus, in order to ensure that you are securing the maximum value from your trades, you need to adjust the trading plan to your lifestyle.
How to maximize your trading funds?
One of the key ways to lock in the maximum value from your trading funds is to sign up to a right Forex broker. It is one of the most important parts as you need to select a reliable broker that you could trust to handle your money. Therefore, you should treat it as a strategic partnership and give it as much time as you would when choosing a business partner. Remember that the success of your trades will not only depend on you but also on the broker you select.
Moreover, the right Forex broker is going to credit your trading account with a high valued bonus, when you an account with them. There is one feature of claiming a trade bonus that you need to understand. That is: once your broker credited your account with the bonus, you are not going to withdraw your funds until you place a particular volume of trades with your bonus.
Thus, the first thing you need to check when choosing the Forex broker is the terms and conditions of any bonus system the firm applies. You need to make sure that the volume of the orders to be placed before bonus credits are turned into real money is a low as possible.
In case you miss out this detail, you will be linking both your deposited amount and the bonus credits to a high-risk set of requirements. This could result in your funds being at even higher risk in case you have not claimed the bonuses in the beginning.
See also: How to choose a Reliable Forex Broker?
Be careful with what you risk!
Always keep the value of any trade you enter and the amount of cash you have free on your trading account equal. The mistake that you need to avoid here is setting the amount for placing on each trade too high. This could lead to the eventual fast draining of your trading account.
A lot of professional Forex traders are seeking low-risk trades. Moreover, it is very useful to look for trades that will allow you to just use a small percentage of the available trading funds on each trade. Thus, you should never risk more than 5 or 10 percent of your trading budget on a single trade.
See also: 5 Forex Day Trading Mistakes
Balance your returns with your initial account
Just the same way as you need to risk the proper amount of funds, you need to ensure that you get a sufficient return in each trade you spread over a single trading session.
It might be beneficial for you to eye a 5 or 10 percent of your initial trading budget as profit. For instance, when you start with $200 in your trading account, you can say the trade was successful if you gained $20 on your next session.
However, you might be aiming for higher returns on your initial budget. Yet, you will be surprised how often you can achieve your 10 percent increase in your trading budget. As a fact, in case you exit the trade as soon as you reach 10 percent goal, you will eventually have more winning trades than losing.
Summing up…
In order to properly adjust the above to your trading strategy, pay close attention to your personality and lifestyle. It is vital to consider such details, as your work-life balance, emotional stance, habits, and the level of risk aversion.
When utilized properly, this Forex money Management plan will definitely work out in your favor.
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