hr: Currency

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If you intend to succeed as a currency trader, then this is a very important lesson, so read on. Aren’t you in business because you want to make money? Well, the first thing you need to learn about money is how to manage it. In trading, this is one aspect that is often overlooked. A lot of traders just couldn’t wait to get right into trading without any regard with respect to the size of their account. The only thing they do is try to assess how much they can afford to lose in a single trade and then go ahead and click the “trade” button. In other words, these people are not traders — they’re gamblers!

Photo Credit: Jeb Ro

Without money management rules, trading becomes gambling as you leave almost everything to chance. In this case you are not looking at the long term return in your investment. What you are doing in this case is simply looking for a jackpot. By managing your money well, you not only get protected from huge losses, but you will also end up reaping large gains in the long run!

If you believe that gambling is the only way to succeed in trading, then you are very wrong. Take for example a casino, surely there are a lot of people already who have won jackpots, but how come the casino is still alive and well? The answer is quite simple: While there were many people who won jackpots, there were even more who didn’t. It is from these people who didn’t win that casinos reap huge profits. They know that, using the principles of statistics, in the long run, they will always emerge as the winner — not the gamblers.

So the lesson is clear: be a statistician, not a gambler. This way, you will always be assured of winning.

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