4. Financial or Money Management
It is critical to understand how to make the most money possible from your good trades once you’ve put risk management measures in place.
All retail forex traders face this challenge. Although trading losses are expected, few traders advance beyond breaking even because they lack the necessary money management techniques to maximize winning trades.
We would look at different money management techniques, their benefits and drawbacks, and how to apply the one that works best for you to take your trading to the next level.
The following are the various money management techniques:
Lot sizes that are fixed.
This is the most basic method of money management for a trader. This method is simple to use and is best suited for beginners who are still learning the fundamentals of forex trading. The way fixed lot money management works is that you, as the trader, decide to risk a certain amount of money on every trade, regardless of the outcome.
PROS or ADVANTAGES:
As a result, fixed lot money management has two sides. To avoid falling into this trap, use the fixed percentage money management technique.