3 Important Things In Forex Money Management
Money management is the management of funds or capital in a trading account. To be able to make profitable trades, traders must have a healthy margin account. Money management is a factor that must be taken into account by traders. Money management will be useful when traders will make decisions. Money management is done before and after investing or trading. It is important for traders to evaluate the money management system. Here are three important things in money management:
Lot
Before making a trading transaction, it is highly recommended to calculate in advance how much volume or lot the trader will use for the transaction. It is recommended that traders use lots of no more than 10% of the capital. This will make margin traders healthier and safer to trade.
Endurance
Not a few novice traders who still make fatal mistakes by setting trading lots that are not in accordance with their endurance capital. The resistance that traders can apply in the long term is 10,000 - 20,000 pips, while the medium term trading is with resistance of 50,000 - 100,000 pips.
Risk Limit
Setting risk limits is something that needs to come first before anything else. For example, by applying a 1:3 risk and reward, the trader can adjust the take profit level that the trader can get is three times greater than the loss for each order. For example, traders use 0.1 lots, traders can limit 300 -500 pips of movement,
Thus this short article, may be useful for all traders. If you don't understand this article, please watch the full video below!
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