Forex traders tend to focus on the strategic aspects of currency trading and most Forex education organizations are geared to satisfying this specific need. Have a conversation with a currency trader. Over 90% will speak about indicators, candlestick patterns or the latest combination of technical studies that can get you into trade 2-3 candlesticks before anyone else.

Look for the 10% who speak about not being sure where the market is going and how they manage their stops. I got news for you; these are the successful Forex traders! Their Forex education is right on target.

Yes, Strategy is important, very important; however, it is only one of the three pillars of Forex education process. To achieve success all three Forex education pillars must be in place and strong. Knowing yourself is the path to ultimate success, strategy will provide that repeatable edge, but being able to hold on to what you earn can only be found in money management.

Here are 3 simple, but powerful money management tips that will keep your Forex account growing while personal and strategic skills develop:

1. Adhere To Your Reward to Risk Ratio

Maintain at a minimum a 2 to 1 reward to risk ratio. That means that the currency pair’s price target should be twice the amount in pips of the stop-loss. If you have a price target that is 60 pips away from your entry and your stop should be 20 pips away from your entry, this means you have a 3 to 1 reward to risk ratio.

Congratulations, you cleared the first hurdle, but this still does not represent a good trade for money management. Be OK with not trading every possible moment.

2. Use Stops

Always use a stop-loss! I will repeat, always use a stop-loss! Write this one in stone. I see novice currency traders make 2 huge money management errors with stop-losses;

1. They simple do not use one.
2. The use a set amount of pips for a stop loss

Set your stop loss based off of your chart technicals. You must give your trade room to work or it is doomed to stop you out. Establishing your price target and chart stops will allow you to evaluate the reward to risk ratio. Do not use a set 20 or 30 pips stop loss. Let the chart tell you where the stop should be and let the next tip be the final judge!

3. Manage Your Overall Account Risk

Most every expert recommends establishing a 1-5% risk profile. So at any given time you will never risk more than 1-5% of your account that is not already in a trade. That’s right. Not your total account, the portion that is not already leveraged in a trade.

The goal here is to continue to play the Forex game. In order to do this the currency trader must understand the amount of maximum loss prior to ever getting into a trade.

Now a determination can be made on whether a trade is affordable. The more experience you obtain and the larger your account grows the lower your risk profile will become. Yes, you risk less as you become better.

A Forex trade could have all the technical stars aligned, exceptional reward to risk ratio, but if the risk profile is violated it is ultimately a bad trade. Losing trades are part of doing business in the Forex market; however, bad trades are the quickest way to back to that 9 to 5!

Strong money management techniques are one of the 3 pillars of successful Forex trading (strategy and self-mastery are the others). It is money management that allows the Forex trader to manage their trading business like a casino and give power to their trading edge.

It is better to have a poor trading strategy with solid money management than vice versa. Mastering your money will allow you to stay in the game and compound your account into profit. Again, don’t get caught up in all the hype. Common sense rules the roost! Use these tips and you too will find success in the Forex market.

ABOUT THE AUTHOR: Todd Judkins specializes in teaching real people how to trade the Forex market for long term success by focusing on strategic, mental and money skills. He is a currency trader, educator and success coach to traders worldwide! If you are now ready t take action, follow this link to begin training with Todd immediately and live in the Forex market today. Visit: http://www.forexjourney.com and sign up for Forex Journey’s FREE Video Newsletter to see Todd in action