Basic Fundamentals of Money Management

Money management is a part of investment management, which teaches us what is the risk that an investor can and must take. Money management in some form is also known as asset allocation, the allocation of the portfolio, management, management position of its size. In the forex market, business money management requires planning, which helps to reduce losses and preserve capital. 

The following basic guidelines for the management of money that can help an investor in the allocation of its resources wisely, in turn help more appreciation.
Value of good effort begins with good planning and the planning begins with the adoption of certain financial goals. Objectives for long-term financial needs in retirement, education, children, etc. and see how fitsin Forex trading. Ideally, the Forex market is not a capricious reaction of a night of drinking, so to speak! 

The second directive on money management, as proposed by the experts, is that the total investment of the funds at any time, no more than 50% of the total capital available for investors.The other half of the available resources should be kept in reserve in case of loss of market or negative direction. 

Another key aspect of managing money is not all your eggs in one basket, often attracted by potential profits, investors will start dumping a large sum of money in a contract of a single currency. This, while offering a significant capital gain potential, can also mean the end of the disk of savings achieved. Once again, a plan for negotiations with the figures of risk tolerance is critical. Experts stress that the total investment in each pair must be limited to 10-15% of the total portfolio. 

The level of risk in a market should be limited to no more than 2% of total capital invested. This is essentially a limit on the amount of risk or loss of a trader is willing to tolerate, if some misfortune or decline in the market. 

A merchant should not invest capital in a few, but ideally in different pairs, the achievement of the benefits of diversification. For example, if EUR / USD, USD / JPY and EUR / CAD. Instead of putting all your money in a couple more pairs merchants portfolio may, in its decisions (based on research) and can be long or short positions. 

2 Contract - long position in EUR / USD.
Contract 2 - short position in USD / JPY.
2 Contract - Long Position in the AUD / CAD. 

The data are essentially the same guidelines as the guidelines! They can not be considered as rigid rules. For example, according to their preferences, a Forex trader to choose up to 20% in a single contract. However, these guidelines for the management of funds are a key resource for beginning and experienced entrepreneurs to help build a sensitive market, set the limits of their profession, realistic goals and profit from negotiations Forex trading smart.
Number takeaway 

The recipe for success in trading FX: audio input / exit strategy, money management and emotional control. Do not put all your money in a market or trade, the design of a portfolio and objectives. Remember, diversification of the portfolio is the key to effective, while the trade Forex!