Forex money management should be every trader’s first concern. Strict money management and risk control are essential to achieving long-term success in the forex market. The high level of leverage available to forex traders makes it important to manage risk exposure and to avoid over-leveraged positions. Successful forex money management aims foremost at the preservation of initial trading capital. Money management is the most significant part of any trading system.

Successful investments in Forex require a favorable combination of three essential components for a currency trader: • strategy of justification and execution of transactions in Forex (trading system); • control over trading capital (risk control system); • psychological and emotional training (motivation and self-control).

Just because forex is easy to get into doesn’t mean that due diligence can be avoided. Learning about forex is integral to a trader’s success in the forex markets. While the majority of learning comes from live trading and experience, a trader should learn everything possible about the forex markets, including the geopolitical and economic factors that affect a trader’s preferred currencies. Homework is an ongoing effort as traders need to be prepared to adapt to changing market conditions, regulations and world events.

Many aspiring traders fail to become consistently profitable because they put too much time into trying to get rich from forex trading and not enough time into the actual process of trading. Becoming a consistently profitable forex trader is the result of discipline, passion, and a willingness to recognize and conquer your own personal mental faults. Becoming a consistently profitable forex trader is the result of discipline, passion, and a willingness to recognize and conquer your own personal mental faults.

Next to learning a profitable trading strategy, money management is the most important factor in determining just how successful you become as a trader. Money management is all about asset protection. That means using stop losses, to limit the damage, and calculating just how much you should wisely risk per trade. Money management describes the actual method of determining the position size under certain, but specific, conditions.

Forex trading involves high risks. The probability of a complete loss of capital is an important issue not only for beginners but also for experienced traders. To reduce the risks, each market participant should develop a set of rules, and always, under all circumstances, follow them.

Virtually every aspect of life runs smoother when there's a plan compared to when things are handled on the fly. A trade plan is important, not only if you trade actively, but to complement your overall investment plan. In many ways, a trade plan is a business plan. It should outline what you're trying to accomplish and how you are going to accomplish it.

Trading the forex market is inherently risky and brings with it the possibility of losing money anytime you enter a trade. Despite the fact that most traders are fully aware of, it’s a curious notion that many traders seem to ignore money management all together, or pay very little attention to it.

Economic news tends to be one of the most important catalysts for short-term movements in any market, but this is particularly true in the currency market, which responds not only to U.S. economic news, but also to news from around the world.