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    Forex Money Management: an effective risk management on the Forex Market
    Forex Money Management: an effective risk management on the Forex Market
    Forex Money Management: an effective risk management on the Forex Market
    Ebook146 pages2 hours

    Forex Money Management: an effective risk management on the Forex Market

    By Gregory Mittel

    4.5/5

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    About this ebook

    Money Management - you have certainly heard these words before, some people describe it as managing money, but I prefer to call it risk management. Every game concerning money, and Forex is this kind of a game, carries risk. The risk of losing capital is really high in Forex. Entering this market without preparation, and I do not mean your 6- or 12-months’ experience gained with a demo account, is doomed to failure. You will be automatically pushed to the position of a donor of capital. Forex is a huge market. The money that circulates there every day can make the richest people of this word feel dizzy. But this amount of money is not taken from nowhere; somebody has to supply this bloodstream. And it is a throng of small individual investors who, deluded by visions of easy profits (mainly due to intrusive brokers’ ads on the Internet), trade their last money and treat Forex as a ticket to paradise. They get the ticket but in the opposite direction.
    Why do so many people lose? I would point to two reasons; foolishness and naivety. Only a naive fool can think that one will enter the market with cash only to make profits. In two weeks’ time he will buy a car, after a month he will buy a house, and he will stop trading after three months, because he will be very rich. Usually it looks like this: after one week one will lose 10 % of the deposit, after two weeks - 70 %, in the third week one will top up for what was lost only to lose what was left in the fourth week (and this is still an optimistic version)...

    Table of Contents

    PrefaceA few words from a tweeting trader
    IntroductionWhy MM?
    Chapter I The history of money, lotto and ...money
    Chapter II Risk, gambling, love and statistics
    Chapter III Dreams of power or what kind of SL?
    Chapter IV What is RR and why is it so important?
    Chapter V Boosting the results for the first time
    Chapter VI The basics of position management
    Chapter VII In the name of the rules you...
    Chapter VIII Percentage determination
    Chapter IX From a trader’s diary
    Chapter X There are 8 virtues and 8 sins
    Chapter XI We boost the results again
    Chapter XII The meanders of trader’s finance
    Chapter XIII We boost the results for the third time
    Chapter XIV A daytradingly - scalping longterm intraday trader
    Chapter XV It is all about a strategy
    Chapter XVI ....

    LanguageEnglish
    PublisherGregory Mittel
    Release dateJun 15, 2015
    ISBN9781310256981
    Forex Money Management: an effective risk management on the Forex Market

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      Book preview

      Forex Money Management - Gregory Mittel

      Welcome,

      It is common for an author to address a few words to the reader on the first page of a book. In order not to break with this tradition, I will also write a few words before I move to something more specific. Of course, you will not miss anything if you do not read these words . So if you have a desire for knowledge, jump straight to the first chapter. If, however, you read author’s editorials it will be my pleasure if you devote some of your time and attention to read mine.

      I assume that if you have reached for this book, you are already familiar with Forex terminology and Forex concepts. If, however, you are totally ‘green’ I will try to explain everything in an accessible way. At the end of this book you will find a mini dictionary and a description of the abbreviations that you may come across – either soon, while reading this book, or in not so distant future, while cultivating your garden by means of mt4 for example. Certainly you would like to know why I have written this ebook. There are several reasons but there is one basic motive. I have seen too many accounts disappearing because the investor had little or no idea concerning the capital management. Money Management does not really bite, it is worth to know it and to use it with understanding. As I am a practicing trader, part of the knowledge that I have regarding MM had to be put in order and divided accordingly so that it was easy to read and easy enough to put in practice in real conditions. What is the advantage for you? You will not have to break down the door, you will not have to acquire this knowledge on your own, exposing your account to losses. You will not have to filter this knowledge for its utility, but certainly reading this ebook will not dismiss you from thinking. It will be a sort of a shortcut through a paved way.

      I was also wondering what style should I use to write this ebook. Should it be a PhD - professor’s style, full of formulas, tables, charts and rhetorical performance, or should it be an informal language as if I was talking to a colleague from work, or a mate, trying to explain what MM is. I chose the second option. Being as proud as a peacock is not in my nature, besides, it is much easier to learn from the notes of a university mate, with his remarks on the margins, rather than to study an academic course book. Of course I could write it in jaw - dropping way that but would you gain practical knowledge from equity graphs and Excel simulations? Does a theory always look beautiful? Trading is complicated enough and requires controlling so many elements that it does not make sense to make it even more difficult. The more you understand what you are doing, the closer you get to almost intuitive trading. Ignorance raises fear, knowledge raises understanding. And this is the main goal - after reading this ebook you have to understand what is an effective MM and you have to use this knowledge automatically, freeing the mind which will be able to focus on the remaining elements of the game. For this reason, there are only 4 graphs and few tables in this ebook, all that is done so that you have as much information and knowledge as possible and that you do not pay for a set of screenshots.

      If you have already scored an MC in your career (to remind you, there is a dictionary at the back of this ebook), then you have a tool in your hand that will help you to avoid this in the future. If you make money, then again you have a tool that will enable you to earn more. It sounds pretty good, doesn’t it? Maybe it is hard to believe now, but it is true, I will convince you soon.

      A little percentage of people who start their Forex adventure takes trouble to find out what is effective Money Management… or even any kind of Money Management. They usually give it a wide berth because everybody wants to trade and rake in the money without bothering about mathematics or statistics. It was no different in my case. When I scored my first almost MC ever (when about 70% of the deposit went into space) I told myself that I would not sit down to trading again until I educate myself effectively. It took a while, I learnt and got to know new things. Finally, I reached a stage at which I was, in my naive opinion, ready to fight again with the market. Despite the good signals which the strategy gave and despite sticking to the rules I could hardly stay break even. Apparently, I was winning, but it seemed to me that I should win more. Something was still missing. Then I got interested in the concept of MM - and I got a brainwave - this was ‘the fifth element’, which was always eluding me. The charts went aside, and I have spent much of my time biting into the intricacies of MM. Money Management is a really powerful weapon that a trader is armed with. For me personally, apart from the strong mind and a strategy, well - chosen Money Management is the third component of success in the Forex market.

      I DO NOT KNOW WHETHER THE HOLY GRAIL EXISTS, BUT I KNOW THERE IS MONEY MANAGEMENT - AND IT HAS A SIMILAR POWER!

      So there you have in front of you digested and systematized knowledge, which I give in your hands. Use it wisely, be patient, do not hurry - you already have the key in your hand, now it is time to open the door...

      Author

      PS.

      Although MM is the leading theme of this ebook, do not be surprised if sometimes it touches the elements of psychology, different strategies, methods and ways of playing specific setups, or it goes astray. It is because you cannot separate MM from what we call trading, and consider it separately. At least I cannot do it. And now I invite you to read ...

      INTRODUCTION

      WHY MM?

      Money Management - you have certainly heard these words before, some people describe it as managing money, but I prefer to call it risk management. Every game concerning money, and Forex is this kind of a game, carries risk. The risk of losing capital is really high in Forex. Entering this market without preparation, and I do not mean your 6- or 12-months’ experience gained with a demo account, is doomed to failure. You will be automatically pushed to the position of a donor of capital. Forex is a huge market. The money that circulates there every day can make the richest people of this word feel dizzy. But this amount of money is not taken from nowhere; somebody has to supply this bloodstream. And it is a throng of small individual investors who, deluded by visions of easy profits (mainly due to intrusive brokers’ ads on the Internet), trade their last money and treat Forex as a ticket to paradise. They get the ticket but in the opposite direction.

      Why do so many people lose? I would point to two reasons; foolishness and naivety. Only a naive fool can think that one will enter the market with cash only to make profits. In two weeks’ time he will buy a car, after a month he will buy a house, and he will stop trading after three months, because he will be very rich. Usually it looks like this: after one week one will lose 10 % of the deposit, after two weeks - 70 %, in the third week one will top up for what was lost only to lose what was left in the fourth week (and this is still an optimistic version).

      At the beginning of a Forex adventure

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