Forex... Money Management... summed up in a song!
By ahgong
@ahgong (10064)
Singapore
June 9, 2009 1:51am CST
I have been reading up about forex trading. And have started to actively update my blog on my progress on at least a weekly basis.
You can view my blog at http://gnmdoubletomillion.blogspot.com if you are interested to follow me on my quest in the forex arena.
Well, one of the most important things you have to pay attention to when trading forex is the money management.
This is because, with good money management, you will be able to stay in the game longer even though some of the trades you put in is losing.
But in the long run, you will be able to stay in the game longer. And the winning trades in the long term will off set the losing ones.
A few things you must understand about money management is:
1) Know when to enter the market.
2) Know when to get out of the market.
3) Know how much to put in when entering the market.
4) Never count the amount you are making until the trade is close. Otherwise, it is like counting your chickens before the eggs are hatched.
And there is a song that sums it all up very nicely in the chorus.
Here is the lyrics to show you what I mean:
[i]
Said, if you're gonna play the game, boy, ya gotta learn to play it right.
You got to know when to hold em, know when to fold em,
Know when to walk away and know when to run.
You never count your money when you're sitting at the table.
There will be time enough for counting when the deal is done.
Now every gambler knows that the secret to surviving
Is knowing what to throw away and knowing what to keep.
cause every hands a winner and every hands a loser,
And the best that you can hope for is to die in your sleep.
[/i]
You can listen to the song here: http://www.ziddu.com/download/5111516/KennyRogers_TheGambler.mp3.html
It is exactly what you have to do when learning about forex.
You gotta know the game and learn to play it right. Cos if you do not understand the charts, the indicators and what the charts are telling you, then you are not playing the forex right.
If you gotta learn how to manage your emotions and your money well in order to stay in the game long.
And like the song said, the secret to the forex "Is knowing what to throw away and knowing what to keep." You must know what is a bad trade and close it early to cut your losses. "cause every hands(trade) a winner and every hands(trade) a loser".
2 people like this
3 responses
@kun2349 (23381)
• Singapore
9 Jun 09
lol =D I dunno that there's even a song for forex or gambling?? lol =D U are really resourceful in finding all these kind of funny funny songs huh?? lol =D
But u are right about your tips.. hehe ^_^ KNowing when to come out of the market is something whereby alot of ple does not know how and when to do it.. Because once they start losing, all in their mind is to wanna win it back asap.. THus in the end, they are no longer analysising their mistakes, and so they sunk deeper..
So only those clever ones or ple with long term visions, will opt to lose some, so that they will only win more in future ^_^
@ahgong (10064)
• Singapore
11 Jun 09
ha ha ha ha... call it the law of attraction.
I have heard this song for a long time already.
Just looking for oldies since my last backup was corrupted.
And when I listened to it, it so happen to have the rules to money management sung in the chorus!
You should download it and listen. It is a very nice song! 
1 person likes this
@lordwarwizard (35747)
• Singapore
13 Jun 09
Yo Ah Gong,
I quite like this song.
Listened to it before last time but you mean it has something to do with gambling?
Normally when I listen to this song, I just go for the soothing tune. The singer slurs his words so I never did try too hard to discern the lyrics lol. 
@lordwarwizard (35747)
• Singapore
15 Jun 09
MM is really important I think. I found out about it too late and everything went haywire because of this missing piece.
I am trying to give forex a go again.
Thanks man for sharing the lyrics. And indeed, the lyrics sound like MM!
1 person likes this
@ahgong (10064)
• Singapore
15 Jun 09
no problem my friend.
I am also exploring the forex.
Maybe we can share in each other's discussion to learn a tip or two from each other.
Heh heh...
when was the last time you trade?
What currency pairs you trade?
Any particular system you follow?
1 person likes this
@ahgong (10064)
• Singapore
14 Jun 09
Yeah, the song is talking about a gambler and the rules of gambling.
And it sounded pretty much like the rules of money management as well.
And it is all in the chorus!
[i]if you're gonna play the game, boy, ya gotta learn to play it right.
You got to know when to hold em, know when to fold em,
Know when to walk away, know when to run.
You never count your money when you're sitting at the table.
There will be time enough for counting when the dealin's done.
Now every gambler knows that the secret to surviving
Is knowing what to throw away and knowing what to keep.
cause every hands a winner and every hands a loser, [/i]
exactly like money management of forex!
Knowing the rules of forex is important when playing forex.
Knowing when to hold a trade.
Knowing when to close a trade.
Knowing when to leave the markets.
Knowing when to cut losses fast.
Secret to surviving the forex, is knowing when to keep a trade and when to close it.
Cos every trade could be a winner and every trade could be a loser.
All about money management. Heh heh...
1 person likes this
@oudine2 (147)
• Argentina
9 Jun 09
Actually that´s not exactly what money management is. All what you say in the post is good and accurate. However money management is more like this:
When you enter a trade you should know how much are you willing to loose (in %) and how much are you willing to win (also in %). A good money management imput should have a relation of 2:1 winning versus loossing. This means, if you want to achieve for example, 50 pips, your stop loss should be 25 pips. The minimum money management reccommend it is 1:1, this means 50 pips of goal, and 50 pips of stop loss.
Why?
A good trading method should be accurate over 40% of the times, and also a bit less is ok, so if you manage to find or create a trading system that wins only 2 out of 5 trades, if your money management is 2:1, in the long term you are going to have nice profits. Trading is all about probability, and having the chances in your favour. A system that has a 50% of winning chances, and the money management is in 1:1 (stop loss is the same as take profit) can win or loose, it´s very randomly the result. So to put it in your favour you need to change that. It´s difficult to be accurate more than 50% of the trades, you need a good management, for being still in profit, even if more of your trades are looses.
There are also some systems, that the goal is to perform great trades, for example, 200 pips, and the stop loss is only 10 pips, or 20, so they can loose many trades, but when they get one, they get back all the money that they lost.
Nice post anyways, I really enjoy reading your forex posts :)
1 person likes this
@ahgong (10064)
• Singapore
9 Jun 09
Yeah... you are right, I forgot the mention the stop losses and take profit positions.
I only remember the "how much you put in" as in the number of lots to play at any given time based on your equity and available margin.
Heh heh... thanks for pointing that out. 
I will take note of it when I write my articles.
Hmm... so far, the things I have learned is to use the 1:1 ration for TP vs SL.
Never a 2:1 strategy. Some food for my thoughts.
Thank you so much for that contribution.
I will take note of it when I write my articles.
Hmm... so far, the things I have learned is to use the 1:1 ration for TP vs SL.
Never a 2:1 strategy. Some food for my thoughts.
Thank you so much for that contribution. @lordwarwizard (35747)
• Singapore
13 Jun 09
I think the general consensus is that 1:1 TP:SL is not ideal enough - at least 2:1 is better.
Then again, I think money management is far more important. Supposedly, you can have a failing rate i.e. less than 50% of winning trades yet still make money because of your money management strategy.
1 person likes this
