Small Losses
Keeping your losses small is the cardinal rule of Forex trading. When you are able to keep your losses small, you are then able to outlast those times when things do not go your way. Small losses will also put you in a good position for that time when the trend turns and you can take advantage of it.
To keep you losses small, you must set your maximum loss before you open your position. The greatest amount of capital that you feel OK with loosing at any trade is will be your maximum loss. A string of losses will not stop you from trading if you have set a small percentage of your float to cover this.
There are many traders who do not have any good money management rules set up so they will loose money all the time and still not know what it is they are doing wrong. If you can stick to this type of rule, then it will cover you down the road as you become a successful forex trader. Failure happens when you have risked too much and did not use any money management rules for yourself. Remember to do all you can to keep your losses as small as possible so when you open a large position, you can capitalize on profits.

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