We’re 100% confident you are attracted by the prospects of getting rich fast in the forex. Why not! The daily turnover in the global forex market is 4 billion dollars! Can you, so clever, educated, capable, easily trained, really fail to put your little finger in at least a millionth of this pie? This $4 grand a day will be enough for things other than just a slice of bread under red caviar. You have already red dozens of promo article saying that it’s easy and fast to learn making money in the forex. Stories of lucky forex traders are impressive and make you want to take up currency speculation.
Popular wisdom says that even the improbable happens from time to time. There’s always one lucky trade that can make you a killing among millions of trades made every minute in the forex market. This doesn’t mean at all that everyone’s lucky. Forex is a market. The idea of a market implies inevitable risk. Unfortunately, 95-97% of beginner forex traders get ruined within a couple of days or even hours. Losses aren’t big – a few hundred dollars, but this failure turns a person away from forex trading for good.
Who do you think is primarily exposed to failure - the unlucky or the uneducated? This question seems rhetorical. Don’t believe promises that after a few weeks or months of training you’ll become a true (and lucky!) participant of the forex market. Otherwise, the entire world would be sitting in front of the computer and making millions on currency price differentials.
The Masterforex-V Trading Academy trains forex market specialists stage by stage. After the Academy’s students master the first level of knowledge and gain some practical skills of currency trading, they can move on to the fist independent transactions in the forex market. To improve their qualifications, students continue training in the Academy at a higher level – and keep on for a couple of years. Such a cyclical method of training is attractive is the way that our students can enter the real forex market as early as after the first stage of learning and, at the same time, hone their skills and make more substantial progress in the forex.
You can start learning the basics of forex trading in the free school of forex training for beginner traders within the Masterforex-V Academy.
The first thing we teach our students is Money Management (MM). Forex trading is about making money. But you can make money only if you have capital. Losing it is very easy – one single losing large trade after a whole series of winning transactions can leave you with an empty pocket. What do you have left to continue work in the forex? The forex trader’s golden rule: avoiding losses is better than making profits.
Articles for professional participants of financial markets dedicated to money management rules were published in previous issues of Market Leader: “Unknown Aspects of Money Management From Professional Traders”.
Managing money requires more skill than making money.
Popular forex wisdom
Traders work in the forex market using trading systems (TS). A lot of TS were created during the 30+ year history of the forex market. Each has its followers and opponents. However, the trading system should be treated by the forex trader as a tactics for carrying out currency trading, while money management is the strategy.
Any tactics used without a strategy makes defeat inevitable. At the same time, based on one and the same strategy you can use a variety of tactical action depending on the situation in the battlefield – pardon the slip of the tongue: of course, the market. Even though the market is a true battlefield.
Working in the forex market takes a long time. We already said that only a few lucky ones manage to win the jackpot and completely retire packed with money. The trader will work in the forex for years making profits and suffering inevitable losses. Whether their effort is successful is defined by the final balance for a certain period: do profits exceed losses or not? The forex trader is like a chicken in that it pecks grains one by one rather than drag a bagful of it. Money management makes sure that profits will eventually exceed losses.
Having a chicken tomorrow is better than an egg today.
Popular forex wisdom
Alexander Elder, a professional trader and author of the bestselling Trading for Living that has been translated into 9 languages, has defined three levels for mastering the skill of money management.
In the first stage, money management defines whether beginner traders survive in the forex market. A strict compliance with fundamental ideas of money management is an issue of survival in the forex market. “Reckless amateurs take a mad risk making commissions for brokers and profits for traders on the floor. When they are washed out of the market, new milksops come as hope never dies”, - this is A. Elder’s tough assessment of people who ignore money management.
On the second stage money management creates and supports a stable income.
The third stage involves already super incomes.
Beginner traders are trained by the Masterforex-V Academy in money management fundamentals – firstly, how to protect their startup capital. Students learn to prepare to trading, define risks, tools for risk regulation, trade maintenance criteria. They learn to survive in the forex market. The beginner’s top priority task is not to get profits, but to avoid losses. It’s like two plus two: when you lose 50% of your initial capital you’ll need to get 100% on your subsequent trades to come breakeven. Notably, less than one percent of forex traders in the world can make 100%, i.e. double their capital. These are true pros that have been honing their skills for years.
Capital needs understanding rather than information.
Popular forex wisdom
Main money management principles aren’t complex but serve as an effective tool for risk control. When defined exactly, the risk allows selecting the right lot size and stop-loss level. Our students learn during their first lectures that money management is based on mathematics, and mathematics is an exact science.
Only after they learn the basics of money management the students of the free school of forex training for beginner traders within the Masterforex-V Academy will move on to first practical operations in simulated accounts.
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