There are a few things I want to discuss with you before you even consider taking a trade. Although right now you may consider the trading system to be accountable for 90% of your success I am afraid you are wrong!
50% of success is the system the other 50% is made up from money management and psychology.
Money Management
The importance of money management is highly underestimated amongst traders everywhere. It is almost like people are missing the whole point of trading. Too much time is devoted to finding the perfect trading system but any trading system without money management is doomed to failure, even the best one! Every trader has to incorporate money management into there trading system with the objective of controlling risk.
Let's go over a simple conservative money management system using an account of $20,000 for this example. Each lot traded on the EURUSD is $10 per pip so to risk 1.5% of the account we can risk $300 on each trade. In pips we would be risking 30 pips. Now for every $2,000 the account increases we can add another mini lot to the trade size. If the account grew to $22,000 then we would be trading $11 a pip and risking $330 on each trade.
50% of success is the system the other 50% is made up from money management and psychology.
Money Management
The importance of money management is highly underestimated amongst traders everywhere. It is almost like people are missing the whole point of trading. Too much time is devoted to finding the perfect trading system but any trading system without money management is doomed to failure, even the best one! Every trader has to incorporate money management into there trading system with the objective of controlling risk.
Let's go over a simple conservative money management system using an account of $20,000 for this example. Each lot traded on the EURUSD is $10 per pip so to risk 1.5% of the account we can risk $300 on each trade. In pips we would be risking 30 pips. Now for every $2,000 the account increases we can add another mini lot to the trade size. If the account grew to $22,000 then we would be trading $11 a pip and risking $330 on each trade.
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