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Thread: Money management techniques

  1. #1
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    Default Money management techniques

    When trading on Forex, it is necessary to know how to properly manage your capital; how to calculate the amount of funds needed to make a trade in order to obtain sufficient earnings; and if it comes to loss, how not to lose your entire deposit.

    To achieve these goals, there are special equity management methods (money management techniques):

    No money management. Most traders neither calculate the amount of funds that are being used when opening a position, nor estimate potential earnings or losses. It is considered to be a technique too, but if the starting capital is small, several unsuccessful trades will make it completely disappear.

    Multiple contracts. Opening several positions on the foreign exchange market on different instruments, for instance, the EUR/USD and EUR/GBP, a trader can earn profit if the price moves in the right direction. Earnings can be considerable, losses too though.

    Fixed amount for risk. Depending on the amount of funds available, a trader decides how much to put at risk when opening a position. The trader then makes deals not exceeding this amount.

    Fixed percent of equity. This technique is similar to the previous one but there is a small difference: the trader determines what percent of the account value to risk, but not the equity amount.

    Adjust trading on win or loss. It is necessary to track statistics on all operations (the number of losses, profits and the relationship between them). Having determined the relationship (either wins or losses follow one by one, or wins are followed by a certain number of losses), you should increase the volume of your position after successive losses waiting for a further win, or decrease it anticipating a loss.

    Equity curve trading. Most people are acquainted with moving averages, which signal the right moment of entering and leaving the market. According to this method, moving averages (long- and short-term) are used to forecast trade results. If the short-term moving average of the equity curve is above the long one, a position can be opened and is likely to be profitable. If the short-term moving average is below the long one, it is better to wait for a while.

  2. #2

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    Its a very important part of forex trading, your funds should be properly managed so that you can trade according to your capacity.

  3. #3

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    In any kind of trading, their is a risk of loosing your capital. Money management is very important in trading. You will have to spend that amount of money which will if lost you can recover. This is also in Forex trading. Nice points told painofhell..
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    Last edited by doloresgibson; 11-13-2014 at 04:12.

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    forex risk we can not guess the direction that the risk that we need to continue to improve the ability of a good trading so that we can be successful in forex trading. and we need to have good money management, trading capital so we will get better

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    to be able to trade with a much longer we need good money management. to have good money management then we will be able to trade with the maximum, many stopped in the middle of the street because they do not have good money management in forex trading

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    Quote Originally Posted by Lucien View Post
    to be able to trade with a much longer we need good money management. to have good money management then we will be able to trade with the maximum, many stopped in the middle of the street because they do not have good money management in forex trading
    a trader surely must have money management skills. Because if we do not have it, we will not get maximal result in forex. We will not be able to manage our fund which we deposited make us earn money. We can try to use cent account like given by TenkoFx

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    Its very important to have money management as in tight situation where you have take close decisions you can be more accurate and quick and avoid taking wrong decisions.

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    Quote Originally Posted by orni308 View Post
    Its very important to have money management as in tight situation where you have take close decisions you can be more accurate and quick and avoid taking wrong decisions.
    of course, to be able to survive in forex then we need to have good money management because having good money management so we were able to survive in forex trading, so we will be able to succeed in this business.

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    Quote Originally Posted by Lucien View Post
    of course, to be able to survive in forex then we need to have good money management because having good money management so we were able to survive in forex trading, so we will be able to succeed in this business.
    To survive in forex, we must have skill which always be improved. We also must have good psychology to maximize our trading strategy in forex. And surely, money management will help us to maximize our trading capital.

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    Quote Originally Posted by CahCuncun View Post
    To survive in forex, we must have skill which always be improved. We also must have good psychology to maximize our trading strategy in forex. And surely, money management will help us to maximize our trading capital.
    yes, to be able to survive in this forex we need good money management to have good money management then we will be able to succeed in this business. therefore try to practice good money management to try to trade using a small capital in freshforex

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