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I am going to present three ideas on money management involving simple maths that you can apply to your trades right now. Here are the concepts in no particular order: 1. Understanding the risk vs reward profit ratio in your trading. Using pyramiding in a single trade position to magnify gains.
This article won’t discuss trade setups in any detail, rather it’s focus is on how simple maths can be applied to your money management. If you don’t have the patience to read and understand this lesson, you certainly are not ready to learn the price action patterns I trade with. Winners need to be bigger than losers. Sorry to repeat what you already know, but it’s an unavoidable fact that to make money over the long-run, your average winning trade needs to be bigger than your average loser. In a nutshell, the only way to achieve this is having your risk be small on each trade and your profit objective being larger than your risk, usually two to three times or more.