Money Management
Money management is not discussed enough and certainly not explained clearly enough. Is it a secret? No. Then why do 90% of FOREX traders loose their Account in 3 months?
That’s a pretty scary statistic but no more so than most new business start ups fail within 2 years. I think what makes it so scary is the speed at which whole accounts are lost. FOREX is certainly a dangerous business, but so is business in general. Look at Lehman Brothers, Woolworths etc. and they were big players. For a private individual it is so much harder.
What’s the solution? Money management plays a huge part in this. Many training courses spend far too much time on strategies, charts, pivot points etc. and far too little on protecting our capital. I’m told Warren Buffet’s first two rules in business are:
1) Don’t loose your capital.
2) Don’t forget rule 1!!!
Embarking on a new career has similarities with going for a job interview – we investigate how secure the other company is, what career path is open to us, what salary can be achieved etc. Yet it consistently surprises me at the lack of specific goals new FOREX traders have when they enter into the business.
Sure, people “want to make a fortune quickly, believe they want and need loads and loads of pips, are prepared to work as many hours as it takes, are prepared to invest a small fortune in unnecessary computer equipment” etc. but they haven’t sat down to work out exactly how many pips they need to make a wonderful living – or even realised the enormous power of compounding their money. Indeed, they seem to spend more time looking for special deals on the internet for the latest monitors or keyboards!
I make a good living from FOREX. I trade between one and four days per week and never for more than two hours a day. I know exactly how many pips I need to make and I do understand the power of compounding my money. Why? Because I was trained properly.
For more information about FOREX training please visit FOREX Training Course – A site aimed at helping you understand FOREX trading.
