First Pillar, Money Management Trading
Many traders experience losses that are arguably not small because of the lack of traders in money management. Given the high risk that traders will face in the market, it is important for traders to have a proper fund management strategy. Implementing money management is actually not a difficult thing to do. Money management is one of the important factors in forex trading related to risk control. There are many ways that traders can do in managing money, but the key remains risk limitation.
Although almost 80% of traders in Indonesia realize that one of the important factors to achieve profit in the market is the management of loss and profit itself. The management should also not be arbitrary, there are many small things in it that traders must pay close attention to. However, this money management factor is often ignored. If traders compare money management with indicators, statistics, analysis, and strategies, there are still many traders who do not pay attention to the importance of money management in trading. The initial problem that will usually be faced by a trader is the losses experienced.
Usually, at the time of a loss, the trader's first thought is to blame the recommender (if the trader follows the recommender), blame the volatile market conditions, or regret not having accurate technical analysis knowledge. But it is not uncommon that the main mistake of these traders is the lack of money management that traders have. No matter how great the mentor you follow, no matter how good and accurate the signal vendor you have, the trader's trading track record will be destroyed if you don't have qualified money management.
Amount of Risk Per Trade
The amount of risk per trade can be measured in terms of money, not in pips, and is usually determined as a percentage of the capital or balance in the trader's trading account. For example, if the trader's resistance or capital limit is 20,000, the trader's loss limit that can be applied is 400-500 pips or 2-3% of capital. Limit per maximum in the cycle of one transaction that is a maximum of 20% of the capital.
With position sizing, the amount of risk in value will always be the same, including no matter how big the stop loss is that the trader sets. For that, traders need to return to money management that has been previously set.
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