Forex risk money management guidelines
Money management East forex cashback actually balanc cashbackforexbtcg the relationship between risk and reward they are often proportional to each other, high reward comes with high risk, low risk when the reward is Eastforexcashback high between the two is not a difficult thing to balance, there are two simple guidelines must be observed any trading plan comes with risk, because there can not be The first and most effective rule of money management is to reduce the riskiness of the trading plan in the first place, and the best way to do that in any financial market is to follow the trend. The trend in the horizontal movement can be made audience, temporarily leaving the market in the vertical movement, if it is an uptrend only open long positions, if it is a downtrend only open short positions, do not work against the market, which cashback forex reduce a lot of risk The second criterion is to make sure that the risk will not exceed: 1. the limit of emotional tolerance 2. financial ability 3. the determination to continue to obey the trading forexcashbackcalculator The limit of emotional tolerance: for small losses, probably The problem is that the definition of a small amount is different for different people, but when the loss exceeds a certain amount, most people will lose their emotions and then do something irrational, such as retaliatory trading, which results in bigger losses. is the affordability of the trading account, that is, not because of a loss so that the account no longer has enough money to continue to trade normally assume that there is a trading system, on average, in every three transactions can be profitable twice, the profit is 10%, but the maximum loss of the transaction can reach 25%, although such losses rarely occur, but it is possible that this trading system should be considered good, but in case there is a time in the The best way is to divide the account funds into ten or even twenty parts and invest only one at a time, while the maximum loss is controlled at 1%-2% In fact, the economic capacity of the account is finally related to the economic capacity of the individual. The principle is to invest only the extra money, the money necessary for life is not to be invested in the determination to continue to obey the trading system: to finally decide to adopt a trading system is not a simple matter, from the very beginning of the selection to later testing will take a lot of time and effort, but once decided to prove that this is a valid system, however, there is no so-called holy grail perfect system any system will have a loss of trading. When several consecutive losses are incurred, the amount of losses has accumulated to a relatively significant number will not lose confidence in the system, will modify or even not to implement the system index? Then start over again from the selection of the system again, and again twice or even forever in the trial of a new system system efficacy needs a certain amount of time to show its stability, a short period of time to change a system is likely to be very good system also eliminated, so do not let the losses are large enough to affect the determination to implement the system instructions, in the continuous losses can be appropriate to reduce the amount of investment, or even stop trading for a period of time. There are several ways to help reduce the risk in order to implement the second rule. You can invest in several non-correlated products at the same time to diversify the risk, control the percentage of each product in the total amount invested, for example, 5%-10%, prepare for the maximum loss that will occur, and calculate the time it will take to earn back this loss. If the maximum loss does occur, you will not be overwhelmed or even abandon your investment plan.