MONEY MANAGEMENT

Setting Up The Money Management

Monitor your risk and decide on your profits and losses, this will show you how.

1. Trade amount = 1 Lot is equal to 100,000 of the base currency. Both the base currency notional about at risk and the paired currency notional are quoted.

2. Position stop loss = This is the maximum amount of money you would be prepared to lose on and individual trade, calculated in pips. The maximum amount of notional value you would be willing to lose is also shown in both currency pairs

3. Strategy stop loss = This is the maximum amount of money you would be willing to lose across the lifetime of the strategy, also calculated In pips. The total number of pips divided by the position stop loss in pips will give you the maximum amount of times that the strategy will run . Ie 1000 strategy stop loss versus 10 position stop loss = 100 times

4. Position take profit = This is the opposite to the position stop loss. How much do you want to make before the trade is closed out. This profit portion is also shown in both currency pairs.

5. Strategy take profit = Opposite of the strategy stop loss and calculations the same but involve position take profit

6. Set Trailing stop = This means as the trade moves into the money, your stop loss raises . Hence giving your trade more value, or if it falls, the stop loss kicks in. For this example, we are using 10pips which means that once the market moves 10pips up our stop loss will also move up by 10pips, also guaranteeing that we breakeven as our 10 pips stop loss has now covered our entry point.