Money Management
What is Money Management?
Money Management - literal translation from English "money management", i.e. rules and actions on the part of the owner of monetary assets to preserve and increase his capital.
The goal of capital management at
The main goal of mani management is the minimization of risks when trading on the foreign exchange market, i.e. the use of rules that will reduce the possibility of losses to a minimum and increase earnings.
Money management is a very important tool, which involves determining the exact ratio of DepositsThe number, volume and duration of trades opened by the trader.
Basic rules of money management
An important principle of money management is the constancy of conditions and rules which have been chosen initially. Starting to trade according to one rule, the trader is recommended not to change them even in case of fluctuations in the market.
The basic rules of Money Management are:
- The risk on a single trade should not exceed 5% of the deposit;
- The take-profit/stop-loss ratio should be at least 3/1;
- Observance of the optimal number of open transactions.
There are many trading strategies based on Money Management, one example would be a system using The Martingale principle.
Why do we need Money Management on ?
Stable profitable trading is practically impossible without following money management rules. Violation or total disregard of money management rules is a common mistake made by novice traders who ignore trading risks in the pursuit of profit. Professional traders are sure that money management rules are the key to successful trading.
Read more about the rules of money management at