Trade Money Management

Here come the non-glamorous hard working nuts and bolts of trading, trade money management but none the less important.

How to manage your risk.

You see it does not matter how perfect you think your strategy is at some point in time it is going to go wrong. “Not mine” you might be saying to yourself. You might think that you have the perfect system that no one has ever thought of before. You might have back tested it till the cows come home and traded a demo account for months. It works, It works, It works! Oh and by the way you might think it’s new but you can bet your bottom dollar somebody somewhere has thought of it before.

So you start live with your own hard earned cash. At first all looks great but then some sad day it doesn’t. It all goes wrong and that last trade was enough to wipe out all your previous gains and then some.

If you do not have your trade money management in place you might win 9 out of 10 trades but the 10th trade will lose you more than the previous 9 winning trades. I see it happen all to many times. There are three things you need to be thinking about and we will be covering them all here soon.

What happens when my strategy goes wrong? 대여계좌

Having a stop order is an important yet simple way to make sure you do not over expose yourself to the market. We will never go into a trade thinking it will go against you but there will always be a time when it does. So our advice will always be “remember to place your stop loss orders” They will get you out of so much trouble, protect your capital and give you peace of mind. So it’s worth saying again “place those stop orders at the time of placing your trades”.

There are three types of stop order that you might think about.

1. The normal stop
2. The guaranteed stop
3. The trailing stop

All three have them plus point and depending how you look at things will depend on which one will be right for you. Let’s take a look at what the differences are.

The normal stop:

When you place your trade the stop will be a point on the chart where you have planned to close out of the trade, therefore risking no more past that point. If the market starts to move against you and this point is hit your trade, with you losses, will be stopped and the trade will be closed. This means you have more control of your loss instead of just blindly leaving the trade and your account open to a greater hit. Sounds sensible right? You will be amassed at the amount of traders who think they can do without stops. They don’t tend to spend that long trading as their account gets burnt very quickly.

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