Eyes and the eyes of the capital or how to reduce the risk of loss
Trading – quite risky. No wonder why many traders, especially beginners, are very worried before the deal. However, the nerves should be protected. Moreover, that emotions greatly interfere with trade. The more a person will experience about whether it is correctly received, the more likely to overlook important detail and lose the deal.
Money management helps to control the risk of loss of capital. Any trading strategy of any trading advisor may not be repaid in any situation – absolute, uniform systems do not yet exist. While a program is to use a trader, he could still lose the deal. And this loss can be quite substantial.
Capital management involves a thorough examination of the market situation before the start or end trading. You need to calculate the percentage of the risk, so when deciding it is better not to hurry. To do this, you need to analyze the fluctuations in the market and make a forecast in which direction further development will take place. Money management begins with the preparation, without which the quality of trading will not work.
Then the player must clearly identify which part of the deposit, he can donate. Naturally, it is impossible to conclude transactions on the total capital. Of course, if he wins the income will be more, but we should not forget that, after losing, the trader will lose everything. Yes, the risk, of course – a noble cause, but money management that is what is aimed to minimize it. Why once again to expose their capital risk?
On the Internet posted a lot of information that tells how to spend money management. There are many different theories and formulas that can be used to calculate the percentage of the risk. The main thing is to leave a sufficient amount of money to a losing trade could continue, without any restrictions.
Of course, it is possible to carry out capital management at the history. Test his theory (calculation formula) on historical data. Carefully review the periods where you lost the deal. Think about what mistakes you made and mark in your trading strategy a new item, it is impossible to do in a certain situation. To make money management more effective, it is necessary to know what losses you may incur in case of defeat in the transaction. Then it will be possible to find a suitable option for risk calculation.
Many newcomers, however, still do not have a trading strategy. Then you should not even start trading. Wealth Management provides – at the beginning you need to create a set of rules to guide trading. On the subsequent trade will be adding new items to correct the error, in general, improve the strategy.
Each trading strategy is unique. Money management is largely dependent on what characteristics does your strategy. For each strategy, there should be a calculation. I thought about my trading, one can easily create formulas that are suitable only for its strategy.
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