Money management is the most important part when trading. There are different ways to look at money management. Money management involves determining how much of your overall portfolio are you willing to risk in any one trade. Money management can define the difference between a successful and wiped out account. Traders who enjoy the greatest amount of success are those who clearly define and understand the rules in trading.

Three Money Management rules in trading:

• Living to trade another day. This is perhaps the greatest advice you can receive when investing. The single factor that causes most investors to over extend themselves and blow up their account is greed. Remember there is no secret or a holy grail to trading.
• Know what you are willing to risk. If you don’t risk too much of your account in any trade today, you know that you will have enough in your account tomorrow. The first thing that you have to do is to determine what percentage of your account are you willing to lose in any one trade.
• Know how to determine trade size. Trade size is the amount of currency you purchase in any one trade.

The most important part of trading is money management. Money management involves the following:

• How much of your overall portfolio are you willing to put at risk in any kind of trade?
• Proper money management can be the difference between a successful account that you are able to manage and all unsuccessful account that you decimate in the next 6 months.
• The trader who are mostly successful are those who have established and clearly defined rules that clearly define trading. These rules help traders avoid the money management pitfall that can pull them down.

Three Important rules in Trading.

1. Live to trade for another day. This is the greatest advice you get when investing. Don’t let greed eat you up. This can make you lose everything. Remember that there is no secret and holy grail to trading.
2. Know what you are willing to risk. If you do not risk too much of your account in any trade today you definitely know that you will have enough in your account tomorrow. Always determine what percentage of your account you are willing to lose in any one trade.
3. Know how to determine trade size. Trade size is the amount of currency you purchase in any one trade. First decide where you are going to set your stop loss. Then figure out how many pips lie between the point where you are going to enter the trade and stop loss point. Trade size is equal to the amount at risk/stop.

As Forex traders we need to know and understand common terms use in this industry. Live traders are usually mixing up terms and they often get confused. Here are some words we should know when we plan to trade currency.

1. Leverage. This is the amount of money you can borrow from brokers to maximize your profit and losses. The higher leverage you can get equals the bigger the trades you can get which can make you earn more. Leverage adds power to whatever existing capital you have.
2. Margin. Traders usually define this as a “good faith deposit”. This is also known do be your down payment to a trade. Depending on how much leverage a trader has will lower your margin requirement. Minimum margin requirement is 2%. This is the amount of money required in your account to continue to trade.

Types of Margin:

• Initial Margin – This is the upfront margin you need to open a position
• Free Margin – This is the left over margin you have to open a future position. This is based on subtracting the initial margin from your free margin.

Here are some obvious benefits that we can get in trading FOREX.

• Leverage. It allows people to take control of a large value of monies even with a small amount of deposit. This is also known as trading in margin.
• FOREX trade are inherently two-way. Basically there are two currencies involve.
• Liquidity. The FOREX market is by far the most liquid market in the planet. More liquid market then the more efficient the execution will be.
• Round the clock trading. FOREX is truly a 24-hour market.
• Tight spreads. There are no commissions to pay.
• You can trade in small transaction sizes. The minimum as of now is at 1000 pounds or at 10 cents/PIP.
• FOREX offers access to a wide range of economies.

Banks had been cautious and reluctant to update their systems. They are careful not to screw up the system that they had been innovating and improving throughout the years. They had done this meticulously to serve and meet the client’s needs.

But as we enter the digital age, banks had learned to level up. Banks had been adding new technology and innovation that had been greatly modified to meet the needs of its client. They have made banking easier. Depositing, withdrawing money and checking balances has been very convenient with this new technology. You can already transfer money, pay bills, taxes, buy and sell mutual funds through online banking. Banks use the Internet to lower costs and reach its clients. They set up legitimate websites that can do most things without even going personally to the bank. This can all be done easily and conveniently with a click of a button.

Money markets are intangible markets which is primarily a telephone or computer market. The major instruments issued and traded in money markets are treasury bills, federal agency securities, negotiable certificates of deposit and commercial paper. The capital market encompasses financial leases and term loans, bonds and corporate equities. These are instruments in which financial institutions may invest in order to allow its value to increase which will improve the overall value on an institution’s assets. The funds of the institution’s capital structure are raised in the capital market.

Functions:
The money and capital market share a common function which is to provide a company, institution or an individual with capital funds. Money markets are regulated to halt or prevent the occurrence of a liquidity problem in which current assets of the institution may be hard to convert in cash. Capital market in the other hand is regulated to safeguard investors from possible problems such as fraud.

Money has had so many faces over the years. The concept of money was already used for thousand of years. Although there are many changes that took place about money, its function still remained unchanged. Over the centuries, money’s widely used as a method of payment thus being very valuable in the society.

Another form of exchange is bartering. During the ancient times bartering was a means of trade exchange. We also term this now as a primitive Pseudo-Currency. During the earlier days people bartered goods such as crops, animals, weapons, tools, slaves and other things they may find valuable. Early forms of government and some religious temples collected goods as payment for tax and other obligations. During those times bartering was a legal tender.

The concept of using money has been very much influenced by this system. It’s concept is similar to the exchange of money.