Sticking to strict money management can be very difficult at times. Over your years of trading there will be countless times when your stop loss will be hit, only for the trade to turn into profit later. This can be extremely frustrating for traders, as they knew they were right, however the market betrayed them.

The worst thing you can do after a loss is abandon your money management. At times, a trader feels as if they need to somehow earn their money back from the market. If this emotion overwhelms their decisions, it can lead to a violation of a trading system’s rules.

There is a common money management system that many traders fall prey too.  Let’s say a trader has a goal to win $100 a day. In the first trade, if they lose the entire $100, the trader will put in another order and risk $200. That way if the trade becomes successful, the trader would have made their money back that they just loss, and still won the $100 they were looking to achieve.

But what would happen if they lost that second trade. The trader would then have to risk $400. If that trade wins, then the trader would have made back $300 in losses and still have the $100 goal in profit for the day.

Sounds easy right? How can one lose?

What if that trader losses yet again? $800 would now be at stake to only obtain $100 in profit. That alone should scream a violation in sound money management.

This particular money management system I have just described even has a name. It is called the Martingale Betting System and it has been around since the 18^th century. Mathematics has proven this method of trading to be an absolute loser. You literally would need an infinite amount of money for it to be a success.

Simply put, over time, any martingale-based system will experience enough consecutive losses to bust any fixed bankroll, plain and simple. Do not for a second think that you are an exception to this rule. If you trade it, you may even have success for years, however in the end you will lose everything. All that time spent and in the end you lose all your money. What sense does that make?

To be a success in online currency trading, you need to have an edge in the market. You have to be able to utilize a system that allows you to take more in than you give back. And you will always give back as every sound trading system should anticipate routine losses.

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