Traders tend to focus too much on entry strategies trading, and believe that this is the key to success. In
fact, it's not that trading entry is less important than just get out
of it, but both are less important to the success of risk management for
good money management. Unfortunately, Hnuk tendencies to ignore money management strategy. It is important that you have a good strategy for the management of money, and only the successful trading will be difficult. Fortunately, this is not a difficult skill to Acquisition.
"Risk management" or "money management" means simply the amount of money that you risk it all in a deliberative process. Even if you are the movements of non-specific points stop loss, you will risk a certain amount of money for each point, and is the place where the application of money management strategy. And therefore your risk management strategy is is to decide on the amount that will run the risk of him in every deliberative process.Why risk management strategy is considered to be important?
The main reasons why risk management strategies are important are:
1. if you continue to risk the same amount in all deliberative process, and not the amendment to the losses, it is possible that you end up losing your money full, or the loss of a lot to the point it becomes very difficult to compensate for the losses (more details in the table below).
2. It is important to have the system determines how much risk at all deliberative process in order to keep things in proportion, and Gla possible to lose a lot on the loss-making operations and does not check enough to trump the operations of successful trades at entry and exit.
A common mistake is to forget that matter when you lose money, you have to do more (proportionately) in order to go back to where it began more than they lost.
It can be difficult to understand that, so I'll give an example:
Starting at $ 100. It lost $ 20. It lost 20% of your money.
There have $ 80 now. To go back to where I started, you'll win $ 20. But wait! $ 20 is not 20% of $ 80, it is 25%, and so you have to win more than they lose ratio.
The following table shows how much you have to win, of the proportionality, to compensate for the losses:
Necessary to compensate for losses losses on capital gains
"Risk management" or "money management" means simply the amount of money that you risk it all in a deliberative process. Even if you are the movements of non-specific points stop loss, you will risk a certain amount of money for each point, and is the place where the application of money management strategy. And therefore your risk management strategy is is to decide on the amount that will run the risk of him in every deliberative process.Why risk management strategy is considered to be important?
The main reasons why risk management strategies are important are:
1. if you continue to risk the same amount in all deliberative process, and not the amendment to the losses, it is possible that you end up losing your money full, or the loss of a lot to the point it becomes very difficult to compensate for the losses (more details in the table below).
2. It is important to have the system determines how much risk at all deliberative process in order to keep things in proportion, and Gla possible to lose a lot on the loss-making operations and does not check enough to trump the operations of successful trades at entry and exit.
A common mistake is to forget that matter when you lose money, you have to do more (proportionately) in order to go back to where it began more than they lost.
It can be difficult to understand that, so I'll give an example:
Starting at $ 100. It lost $ 20. It lost 20% of your money.
There have $ 80 now. To go back to where I started, you'll win $ 20. But wait! $ 20 is not 20% of $ 80, it is 25%, and so you have to win more than they lose ratio.
The following table shows how much you have to win, of the proportionality, to compensate for the losses:
Necessary to compensate for losses losses on capital gains
Necessary to compensate for the loss of profits
Losses on capital
11%
10%
25%
20%
43%
30%
67%
40%
100%
50%
150%
60%
233%
70%
400%
80%
900%
90%
Risk management strategies in Forex
There are three key strategies of risk management and money, and will review them.
Risk fixed amount for each point / trading:
This strategy is very simple, but it is riddled with errors for the reasons mentioned above.
By constant risk of capital for each point / trading:
This strategy Kifbh better risk management, and has two advantages main
1. result in successful trading distinct complications of the profits, while the loss-making trades lose less and less in all trading.
2. Do not be possible to full loss account.
It can also be stronger this strategy in two ways:
First of all, you have to be reluctant to risk the same way in all trading should not. For example, you may have traded Class "A" feel great confidence towards it, and then traded class "B" you want to do it, but you feel less confidence towards it. Then you can risk more on the trading of class "A". It is possible that this is a useful psychological tool to help you overcome any fear of losing trades, but this method should be used cautiously.
The second thing is the ability to disable the risk with fluctuations, through the use of real scale rate index. For example, it is possible to decide that you will run the risk of 1% of your capital Bmekdra 3 times the past twenty days the true scale rate. This will ensure that your profits and losses do not fluctuate dramatically change with market fluctuations. To this effect homogeneity on capital turn when risk management, and is important because it will improve the added influence on your account. This multiplier effect is a key factor in the long-term profitability, and is often overlooked.Risk Management in Forex agenda
You can manage money effortlessly sequence through the use of table that lists your trades, and total your investment appears after each trading process. Through the use of equations that you can quickly show the proportion of risk necessary in the next trading.
Strategy "martingale" in money management in Forex
This article will not be complete without a quick explanation of the strategy "Martnjal". Simply put, this strategy tells you to double the risk every time you lose, even in the end compensate all losses. There are differences in strategy when the risk increased by more than double the previous risk.
You should avoid this strategy fully, where it is easier and the surest way to lose your entire account. The risk began at 1% of the account, the account will be erased after a full pass with seven consecutive losses. It is sure that this happens. "Martnjal" risk management strategy works only to a person possesses all the money in the world. If you are that person, why traded?
Losses on capital
11%
10%
25%
20%
43%
30%
67%
40%
100%
50%
150%
60%
233%
70%
400%
80%
900%
90%
Risk management strategies in Forex
There are three key strategies of risk management and money, and will review them.
Risk fixed amount for each point / trading:
This strategy is very simple, but it is riddled with errors for the reasons mentioned above.
By constant risk of capital for each point / trading:
This strategy Kifbh better risk management, and has two advantages main
1. result in successful trading distinct complications of the profits, while the loss-making trades lose less and less in all trading.
2. Do not be possible to full loss account.
It can also be stronger this strategy in two ways:
First of all, you have to be reluctant to risk the same way in all trading should not. For example, you may have traded Class "A" feel great confidence towards it, and then traded class "B" you want to do it, but you feel less confidence towards it. Then you can risk more on the trading of class "A". It is possible that this is a useful psychological tool to help you overcome any fear of losing trades, but this method should be used cautiously.
The second thing is the ability to disable the risk with fluctuations, through the use of real scale rate index. For example, it is possible to decide that you will run the risk of 1% of your capital Bmekdra 3 times the past twenty days the true scale rate. This will ensure that your profits and losses do not fluctuate dramatically change with market fluctuations. To this effect homogeneity on capital turn when risk management, and is important because it will improve the added influence on your account. This multiplier effect is a key factor in the long-term profitability, and is often overlooked.Risk Management in Forex agenda
You can manage money effortlessly sequence through the use of table that lists your trades, and total your investment appears after each trading process. Through the use of equations that you can quickly show the proportion of risk necessary in the next trading.
Strategy "martingale" in money management in Forex
This article will not be complete without a quick explanation of the strategy "Martnjal". Simply put, this strategy tells you to double the risk every time you lose, even in the end compensate all losses. There are differences in strategy when the risk increased by more than double the previous risk.
You should avoid this strategy fully, where it is easier and the surest way to lose your entire account. The risk began at 1% of the account, the account will be erased after a full pass with seven consecutive losses. It is sure that this happens. "Martnjal" risk management strategy works only to a person possesses all the money in the world. If you are that person, why traded?
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