If we are trading currencies on the Forex-Market, we have the possibility of large profits and, on the other hand, the possibility of large losses. In order to avoid this losses, we want to show you how important the subject of money management is in Forex-Trading.
You must always be aware, that the higher your loss, the higher your profit margin has to be to compensate your losses again. If you make a loss of 10% of your contributions, you have to achieve a profit margin of 11% from your capital to compensate for your losses. With a loss of 50% of your capital, the required gain is, however, already at 100% of the remaining money.
To prevent such high losses, for each tradewe should use just a small percentage of our capital. If you do not use more than 1-2% of your capital per trade, the risk of a big loss is rather low. To comply with these percentages, you'll find on our side a price gain calculator, a margin calculator and a pip calculator. With these you can set the right value for the Stop/Loss and Take Profit before you open a position.