As with any type of investment, there is risk. The idea is to control your risk and be aware of it. This will save you from the infamous margin call, as well as let you control your account in a better way.

On October 18th, the new leverage limits came into effect: 50:1 on major pairs and 20:1 on others. This was worse than the initial proposal of 10:1, but it still caused fury and thoughts that traders would move their accounts to foreign brokers.

There is one component of trading that is a necessity if you wish to become a successful trader and that is money management. With proper money management your trading potential is unlimited, without it you will fail. Too many new traders come into this business and focus only on how much money they can make without any attention to what they could lose. These traders may have some success in the beginning, but eventually they will suffer losses that will debilitate their accounts and leave them with nothing. All of their profits will be gone and they will be demoralized. Many of these traders never recover and stop trading for good.

In another post in the series about forex demo accounts, a serious question is: when to go live? When do you leave the practice account behind, and put real money in forex? I’ve already written that a demo account isn’t only for newbies, so the answer depends…

If you’re a seasoned forex trader, you’re probably trying out the new broker with a demo account. Also for you, it’s important to learn the software, get acquainted with it and especially get to “feel” the broker.

It is well-known that a majority of forex traders fail. But it is not equally well-known that the main cause behind such a high rate of failure is unrelated to the market itself. Not analysis, and strategy, not education and learning, but lack of emotional restraint and mental composure are the leading causes that lie behind the many failures of forex traders. Although it is popular to blame forex brokers for the failure of risk controls and lack of a correct attitude to trading, the fact that a majority of these institutions are doing their business while being monitored by authorities shows that the source of the problem may lie elsewhere  Indeed, experienced traders readily acknowledge that the most important lessons learned by any beginning trader is differentiating between what happens in the market, and what the trader perceives. Price action distorted by excessive emotional responses is the candidate to being the worst enemy of the forex trader.

The forex market is growing rapidly in the last few years. More people are trading currencies. This is especially felt in the current global crisis, when many people were disappointed and disillusioned from the stock market.

Forex Money Management