Currency Trading Fund Management
One beginner takes a course in driving before he ever gets within the auto. He probably makes it to the following city too, perhaps after one or two wrong turns, perhaps with a couple scratches on the paintwork, perhaps a little late, but he arrives in the final analysis.
And remember, that was the same car. In the same way we can take the same currency exchange system, give it to three different traders, and see three completely different results. So what do we need from a fx trading tutorial and other currency exchange courses? Just like with the drivers, understanding how to operate the system is only a tiny part of our training.
Let’s take an example. Around half of its trades are winners. It’s obvious that this is a good system. It should make profits in the long term. However, if you start out thinking you have got a fifty percent likelihood of success so you can risk half of your funds on each trade, you’d be making a gigantic mistake. Fifty percent winners does not mean that every loss will be followed by a win and vice versa. There may be two, 3, four, perhaps occasionally even 10 losses in a row. Or you may have 5 losses followed by a win followed by another five losses.
Later, of course, it might even up and you would have a run where there were more wins; but if you were placing fifty percent or even twenty percent of your account balance on each trade, you would be wiped out long before the wins started coming in. A better risk in this situation would be five percent or perhaps 2 percent. You can check this out against back tests, but always double the worst situation that you see as it is virtually certainly not the worst that could occur.
Money management is something that must be learned by any noob trader. You can see from this article why it’s really important to take a currency trading tutorial of some type before you start trading.
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