Money Management
It is up to you, the independent trader, to decide how much capital you are willing to risk trading the markets. Money Management is the most important aspect in trading. It makes a trader succeed or fail. Discipline is vital. There are traders who win 9 out of 10 trades and traders who win only 2 out of 10 trades. The trader who won 2 trades can make far more money than the trader who won 9. Why?
Top traders have learned how to exit losing trades properly and how to let winners ride. Money Management is about doing your homework. You need to know how much capital you should risk on each trade and how many losses in a row your account can sustain.
Stops and knowing where to place a stop is a very important part of trading. Not using a stop is like base-jumping without a parachute. It makes no sense and a sensible base jumper would never do that! A trader should never trade without a stop. How to place a stop is not difficult to learn.
Learn about technical barriers and how to use them to your advantage. Barriers like support or resistance can help you effectively manage your money. Three technical barriers between your entry and your stop are usually more than enough. Once you recognize those technical barriers place your stop just on the other side. Use the charts to your advantage. Don’t just place a stop 5 or 10% away from your entry, use the charts to find the smartest stop location for that particular trade. Mange your money the smart way. Manage your money the TradeWithPros way!