Money Management

aa33030 posted:

Merrill posted:
You probably are using money management but do not have explicit calculations

Money management involves calculations, being able to calculate using the correct lot sizes for the account balance with a set leverage

Even it’s a very much important calculation; usually I don’t take more than 2% risk; that’s my general rule!

Money management is KEY to almost everything in Forex. And it's a constant learning curve. I've been working on my own money management skills for years and still learn every day.

ForexAngell posted:

Anayallador posted:
I do not always use money management. I can change the number of transactions or the amount of money. I am a very gambler.
I noticed that I am losing less money over time. I hope that this is my merit and in the future I will be able to live without money management.

Please, explain what do you mean 'without money management'? All that you analyse about your past and future trades that is your money management.

Simply analyzing past and future trades is NOT money management. That is trade analysis.

Money management is determining the risk level of your financial exposure and attempting to minimize that risk, by properly keeping your exposure of the available investment capital at the lowest levels available, while still generating a profit when possible.

This is done typically by using smaller lot trade size, counter coverage trades, and properly calculated SL + TP levels.

The reason people lose in forex and other investment instruments is because they do not use proper risk management. ANYONE who says they don't trade with proper risk management, is putting their entire account at risk and any advice from that person should be ignored.

Risk management (money management) is the most important rule.

money management is very good skill which always supportive to avoid risk , but it for all time cannot protect you , becasue market is unpredictable most of the time.

Mohammadi posted:
money management is very good skill which always supportive to avoid risk , but it for all time cannot protect you , becasue market is unpredictable most of the time.

any strategy and management cannot protect you totally. Not only on forex, everywhere and in any business. Money management is a reducing the risk by properly investing / money usage.

Mohammadi posted:
money management is very good skill which always supportive to avoid risk , but it for all time cannot protect you , becasue market is unpredictable most of the time.

It is true that the market is unpredictable, but you can control your maximum acceptable level of risk.

For example, If the market spikes against your trade -1000 pips, this risk could easily be avoided and controlled by using a reasonable stoploss, counter coverage trades, and other similar techniques.

Any time an account gets wiped out, it is absolutely the fault of the investor because they didn't properly manage the risk to their investments. The event that cause the loss of funds is irrelevant, the fact that the account is blown should tell you all you need to know. Blown accounts = lack of properly used risk management.

Professional4X posted:

Mohammadi posted:
money management is very good skill which always supportive to avoid risk , but it for all time cannot protect you , becasue market is unpredictable most of the time.

It is true that the market is unpredictable, but you can control your maximum acceptable level of risk.

For example, If the market spikes against your trade -1000 pips, this risk could easily be avoided and controlled by using a reasonable stoploss, counter coverage trades, and other similar techniques.

Any time an account gets wiped out, it is absolutely the fault of the investor because they didn't properly manage the risk to their investments. The event that cause the loss of funds is irrelevant, the fact that the account is blown should tell you all you need to know. Blown accounts = lack of properly used risk management.

Well said! This is why, I use stop loss trading tool according to my own research! On the other hand, I don’t take more than 2% risk on per trade position!

ratou11 posted:
Money management is KEY to almost everything in Forex. And it's a constant learning curve. I've been working on my own money management skills for years and still learn every day.

yes it takes years and years and you are always learning.

Money management is one of the most crucial parts of trading and yes, I have seen many traders who take this part very lightly and then later, loose good amount of their money. A good trader/investor should always be very careful about putting his money into any venue.

Smith88 posted:
Money management is one of the most crucial parts of trading and yes, I have seen many traders who take this part very lightly and then later, loose good amount of their money. A good trader/investor should always be very careful about putting his money into any venue.

Nice to see your response; by the way, what’s your average risk reward ratio for live trading?

Money management is the bread and butter of trading. If you don't have it and its all over the place then you are destined to fail in this business.

Not only traders are poor with money management but people overall, they do spend tons of money on unneeded things entirely and absolutely anyway for many many deeds out there. How do you plan to go on further with that? I am not sure. And nobody will teach it cause it's not profitable.

I agree completely. When we get inot forex, what determones whrther we continue trading or not is the amount of money that we have in our accounts. The moment you lose all of that money then you are counted as a forex failure if you cannnot get more money to continue trading. You therefore need to manage your money as best as you can. I have had some of my own methods of management and they have worked out for me so far so good. Yours also seem very good. I moght give ut a try and see how it goes.Thanks for sharing with us.

Forex is all about money We are all in it for the money and nothing else. It is also very clear that in forex we can lose that money in just a few days if we do not manage it properly. Some people will say that management is not important and that it is all about knowledge but I say that they are both important. You moght know alot of things but stil make poor decisions with your money because you do not know how or when to apply your knowledge. It is also eveident that different traders have different ways of managing their money. Sometimes only you have the solution to your problem. Develop your own stategies and manage your money in your own unique way.

Money management is not the issue here. What the traders need is knowledge. Once you know everything that there is to know then there is no way that you will not be able to manage your monage properly. That is exactly what I did to make sure that I do not waste all of my money in trades that willl only go against me. Getting the knowledge is one thing but applyiing it is another. Some eople are just unable to do it. Your advice is still on point. I will loook into it.

danpadcas posted:
Money management is the bread and butter of trading. If you don't have it and its all over the place then you are destined to fail in this business.

I totally agree on that. Managing your funds should be the first priority, but many fail on that.

MM is the most important skill to trade Forex. Or even life. if you don't possess one - you are in trouble. best strategy can fall down if you don't know to get use of your funds. so i would recomend before going all in on your live account - good MM and learn it. then practice. and then you will succeed

brotendo posted:
MM is the most important skill to trade Forex. Or even life. if you don't possess one - you are in trouble. best strategy can fall down if you don't know to get use of your funds. so i would recomend before going all in on your live account - good MM and learn it. then practice. and then you will succeed

Well said. Many new traders don't understand the importance of MM and end up blowing their accounts. But Mm is really important and traders must make a necessary plan of action to avoid risk and manage money.

MM is important for keeping you in the game but no amount of MM will get you winning the game. For that you need to know HOW to trade and WHEN to trade. MM is just part of the picture