How to do Proper Swing Trading Money Management

Managing your trading funds well is the key to winning at swing trading. If traders don’t manage their trading capital properly, it is not uncommon for traders to increase the size of their trades too quickly. The main goal of this is to increase the speed and rate at which they make a profit. However, traders who adopt this style of poor money management typically end up with nothing but losses and a zero balance in their trading account.

Good money management is based upon the following main points:

Detach yourself emotionally from the money.
Never trade more than you are comfortable with.
Never risk more than you stand to win.

First, you need to remove any kind of emotional attachment to the money you use for trading. Swing trading should be done with money that is set aside and specifically for trading. This isn’t about failure or the worry of failure. It is about being smart. Trading with money that was set aside for other more important needs will only add stress to your trades. Do you really need to make trading any more difficult by worrying about how you will feed your family if you lose next week’s paycheck? Of course not.

Second, always start small. There is no need to rush. The markets will be around for years to come and you should be in no rush. Just how small should you start trading? Anything that you feel comfortable with. While trading, you should be focused on trading and not on how much money you may win or lose. To avoid having this happen, don’t trade with amounts that make you feel stressed or uncomfortable. You may even start trading pennies at the beginning, but that is ok. The important thing is that you are in control of yourself, your emotions and your trading.

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