Money Management

Have you ever wondered why we’re taught advanced mathematics in secondary school instead of say, how to balance a checkbook or how to not run up credit card debt? How many professional athletes have we heard of who have made millions yet are now filing for bankruptcy? It all comes down to the way you handle your money. And handling your money is a skill you must have to be successful in the Forex market; simple as that. If you can’t manage your Forex trading account, your trading career will be short and unsuccessful. We don’t want to see that happen. Here are some ground rules:

  •  Never try to pull off the Big Score; if you want to be a successful trader, you need to be in it for the long term. Never risk more than you can afford.
  •  Limit Orders are your friends, so learn to use them. Stop Losses and Take Profit Orders can save your account balance and can mean all the difference between profit and loss
  • When approaching a new trade, keep it small in case it turns out to be a loser. If it does turn sour, you can always sell and turn around and buy the opposite trade using either your own investment or leverage. This will compensate for the original loss.
  • When first starting out on the exciting road of Forex market investing, you can actually  practice with virtual money. eToro offers this service and we believe it is invaluable for the   novice in order for them to learn how to invest, how to sell and buy, how to manage their (virtual) money, and how to make a profit. Practice long enough and you’ll develop a strategy with your virtual money that’s successful and then you are ready to enter the Forex market with real money.

The Upkeep of Money Management: It is very easy to forget to manage your money when you become very busy investing. You must always remember, though, to always keep an eye on the bottom line. Know how much is in your reserves. Recall the millionaire athletes who suddenly find themselves destitute after long careers of high-paid careers. Even if you’re not dealing with millions, don’t let that happen to you. Spend as much time managing your money as you do watching the markets.

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Why Should I Use Limit Orders?

If you are looking for a way to protect, your investments use Limit orders. Stop Loss (SL) orders will stop it from dropping below the investment. If you are looking for gain, and analysing how much profit you can make you should use the Take Profit (TP) orders. These tools will help you make a difference in your investments.

Size of Trades

If you are not sure how your trade will come out. Or you are new to trading open a small trade first. This will allow you more options later like using a higher leverage later or even a bigger investment to make up for any loss.

Virtual Money is Great Practice

eToro allows you to practice before you actually make a trade. This will allow you to see what your investment may possibly look like. Taking a chance with the eToro platform for your practice mode will give you the trading practice trades in real time. This is a practice run with no risk.

Also if you decide to use real money, or when you can still run your new theories through the practice mode to see if your strategies work out. It will give you greater chances for gain, and less risk of loss. Testing out your theory will also help you brain storm new theories for your trading strategies.

Money management can be difficult to attain, so once you are on the right track stay on it. It is important to ensure that you stay with it. It is very easy to get distracted or even off track of your management program. If you are looking at short term losses don’t worry because some short term

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