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Posted by Felix
on Monday September 12, 2011 at 10:15:6:
You don't have to keep trading forex with sorrow or regret almost everytime you create a position. Forex trading doesn't ahve to be too hard or heart breaking. One reason why I find that most traders tend to be nervous and worried that their position may go bad is probably because they have not decided on how much they are willing to lose.
Even the most experienced traders know that despite their knowledge about currencies and the market environment, their predictions can still go against them and so they are always prepared for a loss. With forex trading, it can go either ways: win or lose. If you want to trade forex with ease without getting too anxious about whether you would lose, then you need to satrt limiting your losses to what you can accept. If you are a day trader, decide on a maximum loss you can accept per day and deal with it.
Another reason why most traders trade with much anxiety is that they use bad money management techniques such as risking more than about %2 of their capital in a trade.
Assuming you have $1000 in capital and are risking more than $50 per trade, that is too much considering your capital. The general rule is to risk about %1 of your capital for each position you take so instead of risking $50, you should only stake out $10 assuming your trade goes bad and it hits a loss.
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