Money Management

There are a lot of skills involved in trading shares and other securities. Money management trading skills are more important than knowing which stocks to pick and knowing the best time to exit your trade. Money management is also known as risk management, it’s all about preserving your capital and your risk appetite. Many people focus on looking at charts and creating systems in picking stocks and exiting stocks but ignore the important risk dimension to their trading.

It's important to have some sort of benchmark when you are trading forex or stocks - or any other commodity. Setting a benchmark is like comparing yourself against the average in an exam. If you are higher than the average - you're an above average student. Lower than that mean that you're lower then your peers. It helps motivate you perform your best in your trading as well as keep you focused at what your target should be to make your trading worthwhile.

You're in the green - you're actually making money on the stockmarkets. But you are simply breaking even... why? Because you are simply returning your profits back into the markets. A part of trading successfully is managing risk and consequently preserving and protecting your profits. You must trade with a plan - a part of that plan being an exit plan... a stop loss plan, a plan that tells you when to get out when your initial technical analysis that signaled an entry point fails. That is the time to execute your exit plan - if the trade goes sour.

Forty-four per cent of Australian's think they will live as comfortably as they do now when they are retired.