Money Management in Forex

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In the analysis of my short time in trading forex, I have come to discover that success in forex trading depends heavily on money management tactics and not just the market analysis strategies alone. Many of the trades that were losses could have been very profitable if only risk management is applied intelligently.

Please use this medium to share the kinds of money/risk management strategies that you use in your everyday trading.

 

good idea! also met the man with the hammer see

https://www.mql5.com/en/forum/196281

 

One of the most horrible blunders that Forex traders can craft is trying to trade without adequate funds. The trader with inadequate funds not only will be a nervous trader, for all time looking to reduce losses beyond the point of sensible trading, but he will also often taken out of the trading fixture before he can understand any intellect of successful trading techniques.

 

use your stop loss pips same as your TP pips as a minimum , this is about risk reward ratio

 

Financial risk management is the practice of creating economic value in a firm by using financial instruments to manage exposure to risk, particularly Credit risk and market risk. Other types include Foreign exchange, Shape, Volatility, Sector, Liquidity, Inflation risks, etc. Similar to general risk management, financial risk management requires identifying its sources, measuring it, and plans to address them. Financial risk management can be qualitative and quantitative. As a specialization of risk management, financial risk management focuses on when and how to hedge using financial instruments to manage costly exposures to risk.Finance theory (i.e., financial economics) prescribes that a firm should take on a project when it increases shareholder value. Finance theory also shows that firm managers cannot create value for shareholders, also called its investors, by taking on projects that shareholders could do for themselves at the same cost. When applied to financial risk management, this implies that firm managers should not hedge risks that investors can hedge for themselves at the same cost. This notion is captured by the hedging irrelevance proposition: In a perfect market, the firm cannot create value by hedging a risk when the price of bearing that risk within the firm is the same as the price of bearing it outside of the firm. In practice, financial markets are not likely to be perfect markets. This suggests that firm managers likely have many opportunities to create value for shareholders using financial risk management. The trick is to determine which risks are cheaper for the firm to manage than the shareholders. A general rule of thumb, however, is that market risks that result in unique risks for the firm are the best candidates for financial risk management.

 

good MM,

set your SL,

open trade 1% only from your deposit

if you have deposit USD1000, you only can open 1pip = 1usd,

more than that, it can burn ur acc

 

For good money and risk management trader should have decided what his biggest loss on one order can be. Usualy it is in percents of account size, e.g. 1% or 5% (very aggresive).

Decide what stop loss in pips is needed at the moment, that market violatility would not touch the SL.

When You have SL in pips and maximum ammount You can loose You can calculate what position size You can take, that loss would not be larger than You have decided.

Consistency is the key to separate profitable strategies from unprofitable, so You should risk same ammout (percent of equity) for every trade.

Slippage and widened spread should be considered as risks, so use corresponding SL that spread/slippage + market volatility would not make loss instantly. When opening order check spread - if it is too large do not trade.

 

Discipline is one of the most overused words in forex trading educations. Discipline is the ability to plan your work and work your plan...

 
pro_:
Discipline is one of the most overused words in forex trading educations. Discipline is the ability to plan your work and work your plan...

it's like playing chess, also in MM you need to be a few steps in front of your actions

 

There is the nice analysis. It is an interesting and helpful for the money management. It is required proper money investment to get better output.

 

I definitely agree, how you manage your funds will have a heavy impact on the success of your trading

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