Think Money Management before you think about Free Forex Trading Signals

Free Forex Trading Signals - Money Management

Money Management is the most important and first thing to consider when thinking about trading the Forex market. Infact, we at believe it is much more important than a good trading system or great trading signal .

A prudent Money Management plan will force you to use much less margin than most retail traders. Our opinion is to never open a position greater than two times your account balance. A lot of sites/gurus talk about risking anywhere from 2%-5% of you trading capital in any one trade.

WE SAY THAT'S INSANITY!

We say keep your individual losses on each trade between 0.5% and 1% and never be exposed to a greater than 5% loss over multiple trades. That means trades that are usually no bigger than 1X your account balance, and usually less.

But what about the 400:1 margin?....you don't need anywhere near that much, infact 20:1 is probably enough. The brokers give endless credit(margin) to entice people to trade irresponsibly because they make money on volume, they don't care if you make or lose money, either way they are earning.

Remember this, if you make on average 25 NET pips per day and use ZERO margin, taking positions only equal to your account size, you'd be generating a 5% return each month and by scaling up your trade size as your account grows, returns of 70%-80% per year are quite possible.

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