Money management

The key to make money in any financial market, but especially in a volatile one such as forex, is to manage risk. Most of the forex beginners focus only in the "gain" part of the equation, forgetting to take into account to create a loss strategy too.

A money management strategy should define the trades to do based on the following criteria

1. For every position the trade must know what is the maximum capital he's willing to lose, and based on that, cap the size of its position and / or create a stop loss order.

2. The objective should be to maximize gains, lock those gains and minimize losses. To maximize gains, a reinforcement of gaining positions must happen, in a process called "pyramidation". Gain protection and minimization of losses involves the update of stop-loss level as prices go up.

3. The moment to sell is also important, and should happen when the trend starts to signal fatigue.

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