Money Management

A man usually learns from his own mistakes. It is quite reasonable because once we try something new we can make a discovery. Nevertheless some trading advice is quite useful.

• Place Stop Loss and Take Profit orders immediately after you open a position to decrease psychological influence.
• When placing Stop Loss and Take Profit orders profit/loss correlation should be no less than 2/1. Stop Loss should not be placed closer than 50 pips from the entrance point.
• So, Take Profit orders should not be placed closer than 100 pips from the entrance point. With the help of it broker’s factor, i.e. attempts to decrease your profit by slippage (a quote shift when closing a position) is minimized. The size of a slippage will be of no importance for you and you will be able to trade with any broker.
• When a Stop Loss order is more than 50 pips and Take Profit is more than 100 pips positions will be open in average during about two working days. The price goes either in the direction you need or in the opposite one. Why should you wait for the Stop Loss to be executed? After two days close your positions if neither Stop Loss nor Take Profit is executed. If the position is profitable at that moment you can just move your Stop Loss order level to the breakeven level.
• No more than 10% of the deposit should be used as a margin.
• Move your Stop Loss order only to decrease your losses/increase your profit. Do not do it too often as because of a slight retracement your position may close (if your Stop Loss order is too close to the current price).
• Do not close your positions before Stop Loss of Take Profit is executed (except the cases when your position is open for more than two working days).
• Do not open new positions in addition to the unprofitable ones.
• Do not recoup.
• Have a rest. Do not enter the market when you are tired whatever profitable a situation seems to be.
• Do not make any trading decisions under drug or alcohol intoxication.