The simple forex money management tips enclosed will help you increase gains dramatically. Many forex traders don't make big gains, simply because they don't understand the relationship between profits and volatility...

Prices move in trends up or down and this is obvious from any forex chart but within the major trends you have constant fluctuations or volatility. You need to learn how to set your stops to stay with the longer term trends and not be clipped out to early.

Let's look at some basic errors most forex traders make in terms of risk control:

1. They Try and Trade Random Moves

Day traders and forex scalpers try and do this but all volatility within a day is random and there destined to lose and may as well flip a coin. They think risk is small and it is but the chances of getting stopped out are huge.

Understand this - there is no correlation between how often your forex trading system trades and your profits. In fact the contrary is true; if you trade too often you take low odds trades and lose.

2. Trailing Stops To Soon

Look at any forex chart and you will see the big trends last for weeks, months or years but how many traders stay with them? Not many - why?

Because they are so obsessed with protecting their profit as it emerges, they move their stop up to soon and get stopped out.

What happens next?

The trade goes the way they thought and piles up $10,000 or more and their not in!

It takes courage to accept big gains and stay with a trade, when open equity dips occur - but if your forex trading strategy says stay with the trend, don't be tempted to move stops up or take profit.

Here are some simple solutions and were not going to talk about initial stop placement, that's easy - the hard part is what follows and that's trailing stops.

1. Remember the 80 - 20% rule

This simply states that 80% of your results come from 20% of your actions, it's applicable in all areas of life and it's applicable in forex trading and means:

Cut your trading frequency!

I know traders who trade may less than a dozen times a year, yet make triple digit profits, by being patient and simply waiting for the big high odds trades and you should to.

2. Don't Diversify

You hear all about how it reduces risk but it reduces gains too.

If you have a high odds trade you think looks great, why dilute its profit potential with a marginal trade?

Stick with one trade and increase the amount of money you risk.

You hear a lot about risking 2% per trade but if you do that you won't make much, risk 10% or more.

Risk goes with reward and you need to take bigger calculated risks, at the right time to make big profits.

This is not being rash this is being a successful speculator.

If you don't like risk and a challenge don't trade forex.

3. Trail Stops OUTSIDE Of random volatility

Wait for the trend to get in motion then trail your stop behind random volatility and give your trade room to breathe.

If you have the stop to close you will never catch the big trends.

We like to do our stops in line with key chart support and the 40 day MA.

Sure, we give a bit back at the end but you don't know when a trend is going to end and this method will get you more than 50% of major trends and if you do that consistently you will make a lot of money.

A Simple Way to Boost Profits

So there are your simple forex money management tips and there easy to do.
If you incorporate them in your forex trading strategy, you will trade only high odds set ups and stay with the big trends for longer.

Placing a stop at the start of the trade is easy, knowing how and where to trail it is the hard part.

Learn how to do the above correctly and make the tips an essential part of your forex trading education and if you do, you will enjoy better market timing and enjoy currency trading success.