Money management is perhaps the most important weapon in a trader’s arsenal which refers to the strategies and practices used to manage the capital and risk while trading financial markets.
Effective money management is crucial for long-term success, as it helps protect against significant losses and enhances the potential for consistent gains.
A smart strategy for traders to reduce losses and manage their money is to recognize that trading is not like playing in a pool hall or casino. Unlike gambling, where the tendency is to increase bets after losses in hopes of recovering, the principles of forex trading work differently: increase your bets when you’re winning and decrease them when you’re losing.
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