You need to develop trading discipline. If you come to a point in your market analysis in a trading session when you have no confidence on the accurate direction of the market forecast, choose not to trade. Always remember, a lost opportunity is better than lost capital.

You should wait for the market conditions to become clearer before you enter a trade. You should increase the probability of success by trading when the trade setups are strong and risk to reward ratio is not more than 1:2. This is far more important in forex than in stock markets. The forex markets move a lot as compared to the stock markets.

You need to learn that high leverage will give you the opportunity to make a lot more money much quicker. But in case you go wrong, currency markets are ruthless. You can get your account wiped out. You dont see an opportunity clearly. Try to sit on the sidelines. You dont have to trade every time. Wait for the market conditions to become clearer. You should learn to be a patient trader. Wait for the market to come to you.

Leverage is a wonderful money making tool. It is the key to making money in the forex markets. No other market allows high leverage that this market allows. 100:1 leverage means that for a $1000 deposit, you can trade $100,000. This huge leverage allows you the opportunity to make the kind of returns that you want.

But using high leverage can be dangerous. It has the potential of making you lose some or all of your capital if you trade foolishly. Take the example of credit cards; the bank lets you borrow huge sums of money using your credit card on the promise that you will pay it back. You should use your credit card responsibly.

But in case you abuse your credit card. It can lead you into heavy debt. It can even result in bankruptcy. You should manage leverage in forex trading like you manage your credit card. You have $10,000. It does not mean that you should trade 10 lots and use all your $10,000 capital. Using all your capital in one trading session would be foolish on your part and highly risky.

A very conservative yet a very effective trading method would be to never use leverage of more than 20% on your capital. So you should only trade two lots with a $10,000 capital in your account. Using good money management rules and trading discipline, you can grow your account realistically in a short period of time.

The compounding factor of money is very powerful. Many people want to get rich quick. They try to take unnecessary risk. Dont focus on proper trading principles. Develop the discipline in yourself to follow simple money management rules.

If you are trading a mini account, start by trading one position of one tenth of a lot. You will not make much money in the beginning as the position size is only one tenth of a normal lot. But the percentage of returns will compound over time and let you trade a much larger sum of money with the passage of time.

As a trader, you should make realistic goals that can be achieved over time. You should always trade with the money that you can afford to lose! Never ever trade with money that you cannot afford to lose! It is foolish. You should never borrow money to trade. You should not use money that you would use to pay monthly utility bills. You should not use your life savings. You should not think like a gambler.

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