Leverage is essentially the amount used in a trade compared with the security deposit needed by the broker, for that trade. Forex offers the most leverage of any form of investing, which for most brokers, is 100:1, so if you put in $1000, the broker will make that $100 000 when you are trading.

So by investing $1000, you are able to control $100 000 worth of currency on the market. This is what allows traders to pull in such impressive incomes and is also the downfall of less experienced traders if you don’t manage your equity properly and use stop losses. I’m going to introduce you to mini account trading where you can get started and lose a number of times without losing any hair in the process. Regular, full-sized accounts require $5000 to $10000 to really start implementing an effective equity management plan, that is, you can only lose a few times before you’re out of the game if you don’t have that much money and as we all know, by trading intelligently, you can maximize the odds in your favour.

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Traders who failed in forex trading because of they don’t understand the important of money management. Money management will let you know how much you should risk per trade. The aim of money management is the preservation of trading capital to ensure your survival over the long term. The most common method of money management is the percent risk model. It will tell a trader not to risk more than how many percent of your trading account balance on any one trade. Generally, a range of between 1-3% is acceptable percentage to use in order to make money in the long term.

So if you want to follow forex trading signals providers. How can you decide your money management? Let’s see the Zulutrade’s performance page here:
(The following data print screen on 12/09/2010 from zulutrade. It is for this article only, it has no implication on future performance of  these forex signals providers. )

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EUR/USD trades:5
Winning trades:3
Lossing trades:2
Maximum winning trade: 24.4 pips
Maximum lossing trade:-14.2 pips
Total pips:21.6 pips