Perhaps the best advice that you will receive in your trading career is live to trade another day. Currency markets are volatile, brutal and unforgiving. You should learn to survive in the markets.

The single most common factor that causes many traders to blow up their accounts is greed. When you get greedy, you start taking unnecessary risks. You will spend countless hours trying to discover the Holy Grail technical indictor or a forex robot that will make you rich. You believe that by discovering that secret of investing, you will become rich without losing a single trade.

Unfortunately there is no such Holy Grail for anyone. No one has ever found such a secret. You cannot always win. You will win and you will lose. Learn not to risk more than 2% of your account on one single trade. Grow your account incrementally and slowly over time. Never ever get into the temptation to risk big trying to make one single winning trade that can make you rich.

Now, know how much you are willing to risk in a single trade. I have said 2%. But if you want to be aggressive you can go up to 5%. But stay between 2-5%. Dont exceed it. On the other hand, if you are conservative, you should consider risking between 1-2% only.

Once you have decided on the amount of risk you are willing to take, the rest is simple. Suppose you have a $50,000 account. You decide on a risk of 2% only. How much you can risk on a single trade? (50,000)(0.02)=$1,000. This is the maximum amount you should risk on a single trade.

However, if you are in more than one trade at the same time, the amount may be higher. Suppose, you are in 3 trades and you risk only $1,000 per trade. So the total amount at risk will be $3,000. Once you have determined your risk level, you are ready to determine the trade size.

Trade size is the number of currency pair contracts you purchase in any one single trade. You need to first determine where you want to put your stop loss in order to determine the trade size. Lets use a simple example to make it clear and suppose you are willing to risk $1000 on trading EUR/USD pair. You decide on a stop loss of 50 pips. Each pip on EUR/USD pair is equal to $10, so the number of contracts that you can trade are 2= (1,000)/ (50) (10).

Once you have determined your risk level and calculated the trade size, you have taken the guesswork out of your trading. Now, you can sleep well knowing how much of your amount is at risk and that you are going to be able to trade tomorrow, no matter what happens today.

Use these common money management rules and avoid the pitfall of losing almost all the money in your account. Learn to survive the markets and trade another day. This can help your trading take a quantum leap to the next level of profitability.