Managing Forex Accounts
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When you open an account you should make sure that you have enough funds for it. As obvious as it may seem, this advice and its importance for successful forex trades are often overlooked.
Losing money on the forex market is something common, especially for traders that are new in the field. Thus, many of the novice traders end up unable to execute trades even before they have actually started because they overlook the importance of having adequate funds in their accounts.
Estimating Required Funds in Forex Accounts
In order to decide on the amount of money you should begin with in your account it is recommended to apply the 6 ½ test. This test includes the consideration of whether you will have enough money in you account for further trades if you experience a 50% draw down after you have traded for 6 months. If you can continue executing trades, then you have adequate funds in your account. Additionally, you should consider whether you trade with money you are willing and most of all able to lose. You should not burden your forex trading activities by using money you have allocated for expenses you have to pay.
All you should do is to make sure that you have adequate funds in your account. Otherwise, you risk ending up with not enough money for further trade executions.
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