Managing your money is also vital to profitable Forex trading. There are countless strategies that can be applied to money management, but most require you to keep a track of what is known as your core equity. Your core equity is the total amount that you begin trading with minus the funds that you have in any open positions. In other words, if you begin trading with $20,000 and have $2,500 in open positions then your core equity is $17,500.
It is advisable to new traders to start out with a risk level of between 1% and 3% of each trade. For example, if you are trading a standard Forex lot of $100,000 you should limit your risk to $1,000 to $3,000 probably starting with just $1,000. This can be achieved by putting a stop loss order 100 pips (1 pip = $10) above or below the position at you enter a trade.
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