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MONEY MANAGEMENT

The Cornerstone of Profitable Trading

Money Management The Cornerstone of Profitable Trading

Foreign exchange traders and investors dedicate a significant amount of time studying and mastering new trading techniques, trading strategies, and approaches to the markets. However, only a few spend the equal amount of time to learn proper money management.

Money management is one of the most ignored and overlooked aspects of FX trading and at the same time is one of the key cornerstones that form part of a successful trading career.

TECHNICAL MONEY MANAGEMENT: A POWERFUL COMBINATION

The majority of currency traders focus most of their time on technical analysis to forecast price movements, trends, and find high probability trades. Therefore, their technical analysis is directly associated to their money management and risk mitigation strategies. 

Risk needs to always be respected, calculated, and accurately managed in order to attain successful and profitable trading results. The combination of professional technical analysis techniques and strict money management can substantially enhance the chances of reaching growth in currency investments and funds.

THE BASICS OF APPLYING TECHNICAL MONEY MANAGEMENT

Technical analysis has been used for centuries since the times of rice trading in Japan. The information obtained through technical analysis can be an excellent guidance and a roadmap to where price may go next. Nevertheless, figuring out the historical data from a financial market is just the beginning.

This information can only become useful by combining it with other trading skills such as risk assessment, money management, and flawless trading execution. Applying a risk mitigation oriented strategy can provide a novice investor with consistency of profitability, which is normally only experienced by veteran traders.

Several technical analysis techniques may be utilized to reduce your trading losses and increase your currency portfolio’s earnings. In the next illustrations a variety of these techniques such as support and resistance, trend lines, and counter trend trading analysis will be exposed and explained in real life trading situations.

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