Application of the rules of money management in the market is one of the most important and yet often neglected principles of successful trading. You can often uslishat and see more trading strategies, many of which are really effective, but neither one of them is not a word about money management. In this article I will try to tell why money management is so important.
Profitable trading - it is much more than one or two good deals. Talking about the lucrative trade is possible only if these profits will be consistent and regular. This art capital management creates a difference between a successful professional trader and a loser, with the fear of launching the platform in the morning, because he never knows what might see there.

Enough to have only six transactions per month, three of which will be profitable, and three unprofitable and eventually stay in the black. At the same time, you can have 5 trades and only one loss-making, but is this a bad deal will bring you the loss to make up for that you get only in the next few months of successful trading.

What also plays a significant role in the results of the tenders? The answer is simple - money management. The purpose of this chapter is to provide ten basic money management rules that make shopping habits are transformed into an effective income-generating strategy.

1. Open a new account with a reasonable deposit.

Many brokers will tell you that you can start working with the sum, only $ 200. Some will say that $ 50 is enough, that would make a step on the road to success. Market makers will tell you this because they know the truth: almost 100% guarantee that money will be in their hands in the shortest time. To enter the market with a deposit - is like to throw a bone hungry dogs. Neither the trader does not want to measure their profits in the tens of dollars or cents. We all want to get away with hundreds and thousands of dollars! And in the pursuit of greater profit trader tempt fate by trading lots, many times the safety factor of its deposit. Protect yourself against this temptation, which affects almost all novice traders - To compare the amount of your deposit and your volumes of trades.

2. Do not overload your deposit.

One of the common mistakes novice traders to open a position, and that not one using the full amount of the deposit, this is a gross violation of money management as one of the two transactions trader risks losing the lion's share of money or deposit as a whole without the possibility to recover the loss.

3. Do not distort.

In other words, do not open too many trades at the same time. In this case, the risk increases many times, and with it the pressure on your deposit. It also means too many transactions per day - more often than the number of transactions is increasing in an attempt to even be a part of what you have lost. But in any case, you risk losing even more.

4. Use acceptable levels of risk.

Although some may seem to be an attractive deal, limit their risks, to you was something to live on and to make new deals. Experts converging the opinion that the 5% of your deposit - is the maximum allowable amount that may be in the market at any given time.

5. Use stop loss!

Trading in the market and not to use stop-loss and take-profit - pure suicide! If you do not protect your transaction, a simple case of you can play a cruel joke. Any unexpected news or event in one second can deploy the price, and you simply do not have time to react. You leave an open transaction at night and in the morning, puzzled to see zeros in your account.

6. Use a trailing stop.

This is a great technique that allows you to protect and secure your income has already been achieved.

7. Never enter into a transaction in which the ratio of profit to a loss of less than 1: 2.

This ratio indicates only that one profitable trade compensates you two failed. The ratio is 1: 3 means that you can make three losing trades, but only one successful compensate all your losses. For example, if you earned last trade 600 pips, that following this relationship, you can safely perform three trades in a row, losing in each of 200 points. And even in this case, you are not losing money, but only a return to the original amount. That is why even the traders who commit only two profitable trades and three losing trades in a month still make money.

8. Do not trade when you should be sleeping.

Trying to trade in the hours when your body is accustomed to entertain you violate its normal biological rhythm, and your brain is working less efficiently. With this approach, you will lose money rather than earn anything.

9. Strive to take profits even small parts.

Trying to hit the jackpot in trading, you will probably eventually have to master a profession janitor. The path to successful trading is like a race in the ability to earn big profits in small portions. Remember that earned $ 10 better the lost.

10. Trade only those financial instruments that meet you and your deposit.

Trying to trade volantilny tool changes its price value in the range of 50-100 points as a natural correction in the consolidation and put a stop order and 40-60 (tolerable risk to the deal on the deposit) items, be sure of beforehand doomed to failure of the transaction, and having with a relatively small account, you will see it quickly zeros than have time to understand what happened. Your deposit is simply not withstand such loads. However, when choosing a trading instrument you should pay attention to the "understanding" of his trader, obviously everyone is looking to the market under his own corner, it applies to the instruments of define.

Who would not say that, but money management is an really one of the key elements of successful trading. You can use the best trading strategy ever created, have a great trading plan, to be disciplined, but if you do not observe the rules of money management, you will not succeed.

The calculation of the optimum trade position (transactions).

The first trader calculates the risk of a deal by which determines the possibility of acceptable risk for the day, week, month and for the whole deposit. World practice argue that the maximum risk per trade can not exceed 2.5% of the deposit, this will be taken as a basis for the construction of the risk management system.
  • to 2.5% - the risk of a deal;
  • 3% - maximum risk for the day;
  • 9% - the largest drawdown the week;
  • 15% - the largest drawdown month;
The trader, depending on the style of trading, the size of the deposit, the experience must adjust the system risks for themselves individually. For example, the use of risk per trade to trade 1% or 3 months with a maximum drawdown of 10% of deposit, 11% used in the first trading week than 9%. Details of money management depend on many factors and professional trader, so optimally calculated risk transaction will lead to lower losses and an increase in the deposit.

Trading on the market needs to be a contrast to, that is, alternating with rest (intermittent). It is human nature to make mistakes, not paying attention to it. In a market where the risk calculated large sums of dollars, a break - it is integral part of trade it is timely and savings deposit. It is understood that a trader who admits several "stops" in a row without a series of trades, is obliged to pay attention to your psihomoralnoe state, observance of discipline, an understanding of the trading system as a whole.

Trading - this is a difficult psychological work, the reward for which is not the number of hours worked during the period of time, and a qualitative approach to compliance with a set of attitudes and rules of the trading system.

Counting money management service break in trading occurs in the case of:
  • 2 trigger stop-loss (stop orders) a day - a break for 1-2 days;
  • maximum drawdown weekly limit - a break for the next week of trade;
  • maximum drawdown of the month - is desirable break of more than two weeks;
Important: after a series of losing trades the trader is obliged to consciously take a break from trading for their psychological recovery and morale !!!
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