‘Risk comes from not knowing what you’re doing’ – Warren Buffet. Foreign exchange (forex or FX) trading, once the domain of commercial banks, hedge funds, large corporations and high net worth individuals, is now available to anyone with an internet connection and sufficient funds to meet balance requirements. Although a low barrier to entry, a number … Continue reading Position sizing – where SIZE really does matter!
Fearful money, or as we like to refer to it as ‘hot money’, is capital that a trader has a strong emotional attachment to. In other words, it is money that one CANNOT afford to lose, and therefore, should not really be using it to trade the markets with. An example of hot money is … Continue reading What Does Fearful Money mean to Traders?
As briefly highlighted in part one, the staple behind any respectable trading plan will place a strong emphasis on risk and money management principles. What is your overall market risk? Overall market risk is the maximum permissible amount of capital at risk at any one time. As an example, let’s say that we have set … Continue reading How to Build a Trading Plan: Part Two
Legend has it that when asked to name the greatest invention in human history, Albert Einstein replied ‘Compounding interest’. Whether Einstein actually said this or not, we would certainly not be one to disagree! In simple terms, the compounding part comes from the interest you earn on the interest you’ve already earnt. As … Continue reading What 2% a month can earn you