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By: Milos Pesic
Forex money management is one of the most important things you can learn before you actually begin making live trades.

The money management principles discussed here will teach you how to avoid the costly mistakes many new traders make, often to the degree that they lose their entire investment on the first handful of trades.

Psychology is really the most important factor to money management in forex. You have to be able to separate yourself from any emotional attachment you may have to your money. This is not very easy to do, but it works and it can be done.

If you allow yourself to become emotional on a trade, you will not exit the trade properly, and this could mean holding on to a trade when you should have let it go, or letting go before the trade had a chance to turn profitable.

First and foremost, you should consider leverage and risk. It is advisable that you never risk more than two percent of your account balance on any trade. However, some go further and allow for as much as ten percent, but never more than that. This gives you the ability to withstand market fluctuations, and if the trade goes bad, you still have money to try again. You should never operate under the assumption that you will profit from every trade.
You should also plan for losses. Therefore, most traders will tell you that the best thing to do is to keep your gains large and your losses small. Develop your trading strategy around this idea.

Keep track of your gains and losses. Keeping accurate and detailed records of your account activity will allow you to see whether or not the strategy is working, or if it needs to be re-built.

Never go blindly into trading without a way to keep track of results. You will lose all of your funds and never understand why it happened.

Finally, it is highly advisable that you first practice a strategy on a demo account. Nearly all brokers offer a virtual account whereupon you make trades in real-time, but with imaginary money, so nothing is risked. This is the best way to test a strategy before you put your real money on the line.

However, be careful, once again, of the psychology of trading. When you play with fake money, nothing is risked. When real money is on the line, you must not get emotional. If you do, you will find yourself with very different results, most likely losses, than you had with the demo account.

By: Sudhir.K.Sharma
Most companies vastly underestimate the time commitment necessary to successfully complete a financing. In actuality, a company seeking financing needs to budget between 500 to 1000 work-hours to the capital-raising process, spread out over a 6-9 month time period.

The key processes in the capital-raising process include 1) perfecting the business plan, offering memorandum and other company due diligence materials, 2) developing a comprehensive, targeted prospective investor list, 3) contacting this list and responding to investor due diligence requests, and 4) negotiating the transaction.

Completing the business plan typically requires at least 200 hours of work. This time is dedicated to conducting the market research to validate the opportunity, developing a comprehensive financial model, determining the most effective way to lay out the business strategy, and actually writing and proofing the business plan.

The next step, developing a comprehensive, targeted prospective investor list is also very time consuming. There are thousands of potential investors, each of which has very different tastes regarding the types of ventures that interest them. Some invest by market sector (e.g., healthcare vs. telecommunications), stage (seed stage vs. later stage), geography, or a combination of these. Many hours must be dedicated to determine which investors is the right fit for your venture. This process involves creating a master investor list, visiting each investor’s website to view investment criteria and past investments, and determining who the right contact at the firm is.

To see how easily the time adds up, consider that only about 25% of prospective investors who show an initial interest in a transaction actually progress to detailed company due diligence. Only about 10% of this 25% actually progress to a bonafide offer of funds, of which only 25% of these actually result in an investment transaction. So completing a financing transaction requires, on average, contacting approximately 160 pre-qualified prospective investors.

The due diligence process, where investors scrutinize the investment, can also be very time consuming for the company. Investors often request many documents, some of which can be easily retrieved from files (e.g., prior tax returns), while others may take more time to prepare (e.g., additional market analysis, customer lists with past purchases, contact information, etc.). Finally, negotiating a transaction can take a significant amount of time depending upon the complexity of the transaction and number of parties involved.

Too many companies fail to raise capital since they are unaware of the significant time requirements to do so. Those firms who understand these requirements and budget accordingly are the ones most likely to persevere and end up with the capital they need.

Author: Toby Smitz
Trade With Sufficient Capital

One of the worst blunders that forex traders can make is attempting to trade without sufficient capital.

The trader with limited capital not only will be a worried trader, always looking to minimize losses beyond the point of realistic trading, but he will also frequently be taken out of the trading game before he can realize any sense of success trading the method(s) or patterns.

Exercise Discipline

Discipline is probably one of the most overused words in forex trading education. However, despite the cliché, discipline continues to be the most important behavior one can master to become a profitable trader. Discipline is the ability to plan your work and work your plan.

It’s the ability to give your trade the time to develop without hastily taking yourself out of the market simply because you are uncomfortable with risk. Discipline is also the ability to continue to trade the methods and patterns even after you’ve suffered losses. Do your best to cultivate the degree of discipline required to be a world-class trader.

Employ Risk-to-Reward Ratios

The following shows you possible risk-to reward ratios, and the win ratios required to break even in a trading system.

Risk-to-Reward Ratio (in pips)and Win Ratio Required to Break Even(%)

40/20 (2 to 1) = 67%, 40/40 (1 to1) = 50%, 40/60 (1 to 1.5) = 40%,
40/80 (1 to 2) = 33.5%,
60/20 (3 to 1) = 75%,
60/60 (1 to 1) = 50%,
60 /90 (1 to 1.5) = 40%,
60/120 (1 to 2) = 33.5%

Important Note

Never risk more pips on a trade then you plan to make. It doesn’t make sense to risk 100 pips in order to make only 10. Why? See below example.

Profit taking level (pips): 10
Stop used or pips at risk: 100

You win 10 times which makes 100 winning pips.You ONLY lose once and have to give back all profits!!!

This type of trading makes no sense and you will lose on the long term guaranteed!

Author: Lil Waldner
Inflation starts growing again in a lot of countries. The monetary authorities tend to increase the interest rates in US as well as in EC. Many employees complain that their salaries do not keep pace with the inflation. It’s good to think about cutting the costs of every day’s life.

What Are the Main Expenses?

The main expenses of families usually are housing, insurance and transportation in their budgets. Tax Expenses cannot be influenced by people who work as employees. Energy expenses increase worldwide and this tendency is going on during the next years. What can be done to keep these inevitable expenses low in order to spare money to fulfill your wishes?

Housing

You need to draw regular comparisons among the different mortgage rates. Can you find a bank that provides you with more favorable mortgage rates after the expiration of your contemporary contract?

Insurance, Health Expenses

You need to do the same with your different insurances. Many people suffer because of the increasing costs for health insurance. You also can ask your doctor to prescribe the cheaper generic drugs instead of the expensive original pills. The generics are as effective as the original trade marks for fighting most of the widespread diseases.

Transportation, Energy

Fuel costs are going to increase worldwide. It is recommendable to buy cars with low fuel consumption. You can save a lot of money, in particular if you need to drive long distances for your way to work, college or shopping. It’s better driving in a steady and quiet way instead of racing. This also helps you saving fuel and expenses.

Most of the industrialized countries produce electricity with oil or gas. The prices for power are going to increase because crude oil and gas get expensive on the world market. You need to buy machines and appliances with low power consumption. Do not let your machines run at the stand by mode. It absorbs a lot of power and costs. Fill your laundry machine fully if you wash your cloths.

Shopping

Use all the opportunities of discounted offers at the super markets. It’s better to buy new dresses if the prices get discounted after the main season. You also can get fine dresses of famous brands then, sometimes up to 50% cheaper. By the way: A lot of consumer tests show, that famous brands do not always perform best. The cheap imitation produce of a super market chain does often show the same or even better quality.

Fulfill Your Wishes

You can save some nice money if you follow the hints above. You can afford to buy something nice for your partner, friend or children. You can eat in a fine restaurant. You can enjoy a weekend in a leisure resort with your family. You can do what you like and you get more free choice.

Author: Michael Russell

In this article we’re going to discuss money management and how it applies to paying bills.

A lot of people might think that money management and paying bills is a contradiction in terms, and in a sense it is. The truth is, if you have a bill that has to be paid then it has to be paid, money or not.

However, having said that, there are things you can do with managing your money to give yourself the best chance of paying those bills. It just takes a little bit of thought and a lot of discipline.

To start with, if you have a steady job that is half the battle right there. Good salary or bad, at least you know each month what you’re going to be bringing home. From there it’s simply a matter of making a list of your constant expenses such as rent or mortgage. Those are the things that don’t change from month to month, at least until your lease expires and the landlord raises your rent or there’s not enough escrow to cover your taxes and your fixed rate mortgage suddenly goes up a hundred bucks a month.

The best way to illustrate how to do this is with a fictional example.

Let’s say your monthly salary is $3000 after taxes. That’s what you bring home. That’s what you have to spend. A certain portion of that goes for what we call fixed expenses. Those are things that you have no choice but to pay for each month.

To simplify this, let’s say these are the items that you must pay each month.

Rent - $700 Telephone - $50 Gas and Electric - $100 Insurance Payments - $200

That gives us a fixed expense of $1050.

Then we have what we call semi fixed expenses. These are items that we have to pay each month but what we pay is really within our control to some extent.

These include…

Gas For Car - $80 Groceries - $320 Total semi fixed expense of $400 a month.

So now are expenses are up to $1450 a month that we pretty much can’t get away from.

Then we have our variable expenses. These are mostly the things that we really don’t need but want, like entertainment and this covers everything from buying CDs and comics to your cable TV and magazine subscriptions.

This is where real money management comes in. See, this is where you have to look at how much you have left, determine what you want to save from that each month (you do want to save right)? and what’s left is what you have for your fun and games. Now, if you have a lot of money left over, like in this case, then most likely you don’t have to think about your little pleasures. But let’s say all you have left over after your regular expenses is $200 for the whole month. That comes out to about $15 a day.

Guess what? That’s how you manage your money. You take $15 out of your drawer every day and put it in your wallet or purse. You have that much money to spend on day one of the month. Don’t spend any of it? Then the next day you’ll have $30 to spend when you add your next $15. If you do this each day you will find that when the month ends there will be no way that you will have spent more than you have.

Naturally things happen. Repairs and unexpected items pop up. But by keeping a tight lid on things and not going out and blowing $150 on a dinner for two at the most expensive restaurant in town (as nice as that sounds) you give yourself the best chance of getting through your month and actually putting away a few bucks in the bank.

See, you really can manage your money and pay the bills at the same time.