Money Management Techniques!

Discussion in 'General Trading Discussion' started by TraderAnalyst, Jul 8, 2019.

  1. TraderAnalyst

    TraderAnalyst Senior Investor

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    Money Management is an important factor in Trading, rather the most important factor! Traders must not ignore them and utilize them intelligently. Few techniques are follows -
    1. You must decide how much you wish to risk per trade
    2. You do not need to over trade.
    3. You must close your losses and continue with winning positions.
    4. Stay away from Fear and Greed.
    5. Calculate your position correctly.

    Happy Trading!
     
  2. J_C_Anderson

    J_C_Anderson Senior Investor

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    Money management is extremely important. Many traders, especially newbie ones, quite often pay attention to technical part of the trading like searching for signals and entry point, but forget about money management. At the same time, it is necessarey to develop detailed enough money management rules to be able to make profit, because lack of proper money management would lead to losses even if your strategy itself is profitable.

    It could be difficult to answer the quiestions listed above especially if you just started with the new strategy. To get the information on optimal risk per trade or stop width you can backtest your strategy on historical data using special software like Forex Tester or its alternatives. As the result, you will get detailed information on the performance of the strategy, which is important to create money management rules. For example, information on average wins and losses would help you to find out the way to calculate position size according to the strategy and size of your account. Backtesting would also show you the optimal numbers of trades per day or per week, so you will be able to avoid overtrading.
     
  3. tradermuslim

    tradermuslim Active Member

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    You forgot to mention Stop Loss option. It is the best tool to prevent total loss.
     

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