forex factory- is money management in forex the real deal in trading?

Let me inform you that forex factory in comparison to the amount of time, money and energy spend by some traders on forex robots, error proof technical strategies and quasimagical foreign exchange trading courses where they are promised to be made super traders; it is a real pity that money management receives insufficient attention.

 

Although almost every trader worthy of the title is aware that success in forex is largely dependent on careful management of losses, as well as profits, this aspect of trading is somewhat neglected in preference to indicators, statistics, analysis and strategy.

 

Yet the first issue faced by a fresh trader is losing money while trading and strategy or analysis doesn’t say much about how to cope with it. As such, careful study and practice of money management methods must be paramount in the mind of the trader who is committed to achieve success in trading forex.

 

Now you might ask me what analysis is. It is the identification of high probability scenarios for profits. Probability does not involve any certainty, and by definition, any analytical scenario, however solid it may be, will lead to losses sooner or later.

 

In the case of the beginner, whose skills are underdeveloped in the worst, losses will come a lot sooner than profits. It is clear, then, that any trader’s education must begin with a good understanding of the importance and necessity of money management skills.

 

Money management teaches us how to manage losses, and how to maximize profits. It all commands us to cultivate a responsible and disciplined attitude to trading by acquiring consistency in our habits. We are taught not to be erratic in trade sizes, and to be consistent about the entry of stop loss or take profit orders, and above all to regard loss as natural and indeed inseparable part of trading career.

Let me remind you that there are several ways of managing loss however there is no way of avoiding it altogether in a trading career.Let me give you a simple example, even George Soros has had a number of serious and sometimes massive blunder in his long career, but he is still regarded as a master trader by most of us.

 

Again let me give you another example, warren buffet bought the shares of an oil company at the peak of the oil bubble in 2008, and he made wrong choices with Solomon brothers in the 90 as well. However all these traders mentioned above were quick to recognize errors and manage losses instead of denying them and letting them fester and achieve huge proportions.

 

Thus at the end of the day money management is the heart and soul of trading, the safety valve against errors, and the shield against fear and irrationality. Forex trading brokers may give you the tools of technical analysis and tens of indicators; however money management skills can only be acquired by diligent and patient practice and a total commitment to success in trading.

 

On the other hand forex factory a master of money management is a master trader and it is but a matter of time before he perfects his skills in analysis and strategy and acquires the great riches which he deserves. Now if you want to learn some real money management techniques then please visit here.