How much money can you risk?

In Risk Management section we discuss how important capitalization is in determining your success in trading. So much that, it is one of the main reasons why most beginners lose out in forex.

For starters let's begin with, can you afford to do forex trading? Trading is risky (stating this for the nth time). So any money you put into it can be lost. For that reason you don't want to risk money you need for your daily living (or) for your daughter's education (or) for medical expenses. It should be money you can risk losing – your Risk capital.

Risking money kept aside is not just a bad financial decision, but will also be unnecessary stress for every pip that the currency pair moves against you.

Be wary of Under-Capitalization

This does not mean you go trading with just $25. It's definitely possible, but reduces the probability of successful trades, since you are likely to get wiped out within the first couple of losses.

Learn more about how much money you need to open an account and which type of account best suits you.

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