One thing is making money in your trades, but learning how to manage your money is very important. I can’t illustrate this enough because people start out in this market trying to make big money and don’t learn how to properly handle their money or even take care of it.

Making money is very easy in this market once you learn how to do it. The problem is that you can easily lose out money on bad trades. Obviously your goal is to limit risk, limit loss and maximize profits. Once you get this down you’re going to be great.

I’m sure you’ve heard of the people that are broke and win the lottery. Within a few years they’re broke again. Why? It’s a management of money. They just buy up things. When they buy a $50k SUV, they don’t really buy it, they get a $600/mth loan to pay back. Eventually they spend all their money on crap and are left with these huge monthly payments.

Most new forex traders do the same thing… sorta.

Here is the first rule for you…

Don’t Risk More Than 1% On A Trade

The need to limit the amount of money into a trade for the sake of consistency and reducing risk. Let’s say 55% of the time you profit from your trades. You can still lose out big if you’re putting 1% in a trade and 5% in another trade.

You want to be able to keep risk at a very low level and keep it consistent.

10-20% of Cash

As you know, when you deposit a $1000 into an account, you can typically trade up to like a $100,000 in the forex market. Putting the entire $100k in the market is bad. One tiny move and your $1000 deposit is gone and so is your trades. When you only use 10-20%, you’re in a much better range that won’t cause you to lose your original deposit in one little movement.

This is just obvious mechanics of the market.