Money Management

It is one of the techniques that each and every trader should focus and nurture it.

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!

Actually how much we can earn our trading it depends on the markets movements. It’s not countable at all by our trading accounts. I was profitable when I started my live trading with 1K. but I did huge loss when I increased my balance in 2.5K but there was same strategies with same money management.

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.

Mohammadi posted:
Actually without proper money management even the best strategy would yield poor result. Money management begins with determining the lot size or allocation of capital to a trade. This is followed by assessment of risk to reward ratio and usage of stop loss and take profit facility. Unless and otherwise a trader is adept in all the criteria mentioned above, it would be very difficult to come out successfully in the long term. Very few traders are exceptional in money management and so they perform exceedingly well than others even when similar trading strategy is used.

Thank you for the important and useful information.