Forex Money Management

Just as in other trading markets, you may lose money in Forex. But in the Forex market, you won't lose very much. Indeed, you can control how much you lose, and, even if you lose 50% of the time, you can still make money in the Forex market using proper forex money management.

No one can win in a market all of the time. This is impossible. There are some times that you win, some times that you lose. If you win more than you lose, you are doing okay. If you win more than 75 percent of the time, you are doing fantastic.


The most you can lose per trade in the Forex market is $100. This means that if you decide to open a mini account and purchase a pair of currencies, the broker will close it when it reaches $100, which is the average price that you pay for a lot of currency.


Even if the entire market loses value, your broker will close your account when the loss reaches no more than $100. This safeguard protects you as well as the broker. Be assured that your Forex market broker will never give you a margin call to question a position.

You can set a limit as to the money that you lose using Forex money management by setting a stop and a limit to each order. You set the sell point where you will bail out and the point where it will close your order. You will want to set your stop far from the purchase price so that it is not triggered by market jitters that are normally part of the game, but close enough so that you do not lose more money than you can risk.

Prior to initiating a trade, you'll want to double check your support and resistance points. This is especially true where the currency pair is trading within a channel. Depending on whether you're entering a bear or bull market, the low price might become the high price or visa versa. If there is a breakout, you need to ensure your stops or limits are well-positioned to protect any gain or reduce any loss.

Using Forex money management wisely, you can control the amount that you earn by setting your limit twice as far from the entry point as your stop. If the trade is going your way, you can earn quite a bit more money using this method.