Money management in foreign exchange trading
If the rebateforexbroker account explodes, I believe the problem Forex Rapid Rebate def rebateforexitely improper ForexRapidRebate of funds, not cherishing the trading capital Of course, the lack of trading skills may also be part of the reason for failure, but the biggest problem must be the method of cashback forex management rebateforexfee risk control No capital, there is no trading, so you should never take too much risk As a foreign exchange investor, will judge the trend is certainly important As a foreign exchange investor, will judge the trend is important, but in foreign exchange trading, sufficient funds are also very important Many people think that finding a good entry point is the key to success In fact, that is only a small part of successful trading by using the correct means of money management is the most important component of successful trading whether it is stocks, futures, or foreign exchange, successful traders always put the correct method of money management as the first rule of making money A. Foreign exchange trading in the management of funds Foreign exchange trading is a relatively large speculative market, there are three elements in the transaction is very important, namely, the direction of the transaction, capital management and stop loss Funds management is the proportion of the total funds held by us in the transaction, to 50 times the proportion of financing to calculate the foreign exchange transactions, if the total account funds for 10,000 U.S. dollars, then only 1 lot of transactions at this time, the occupied margin This is also our recommended ratio of funds A standard contract unit is 100,000 U.S. dollars, that is, when you win a point you get 10 U.S. dollars of profit, the same loss is the same when your account balance of 100,000 U.S. dollars of 1%, the bank will be forced to close your account, and you will lose the opportunity to trade again Funds management is more reasonable in the case of 10,000 U.S. dollars of account when trading only to do The account of $ 10,000,000 in trading only do 1 lot single, that is, in the transaction if the wrong direction up to 800 points, the same situation to do 2 lots up to more than 400 points, and so on, of course, in the strict implementation of the three elements of the transaction is not such a loss, because there is a stop loss exists so the position more risk will also increase, of course, accompanied by a doubling of earnings, but we make the transaction The premise is that we would rather not earn than lose, so risk reduction is the constant principle of long-term existence in the foreign exchange market Second, the cause of death of foreign exchange traders Money management includes the design of the portfolio, how much money should be allocated, the use of stop-loss instructions, reward - risk ratio trade-offs, after a successful or frustrating stage, respectively, what measures to take, and conservative and prudent way of trading or bold and aggressive way, etc. If you want to be invincible in the long run, you have to manage your money. Money management solves problems that are a matter of life and death, it tells traders how to control their money. Every 18 year old young guy who brags about the speed of his car may be fast, but unless he has good brakes, he will end up in a car accident. What is the relationship between money management? A trading system may impress you with its ability to make money, but money management is the key to avoiding bankruptcy and becoming a real winner. Once a trader has decided to take a position in a market and has chosen the right time to enter the market, it is time to decide how many contracts to buy and sell. You must calculate the maximum loss you can tolerate as a percentage of your total trading capital. You must also be clear about the maximum risk you are willing to take at any given time on the overall position, and the level of your willingness to take a loss, in other words, if a loss of $X occurs on a given day (week or other time unit), you will close all positions (or at the very least, close the losing positions). Once that happens, its best to take a break, let yourself cool off a bit and get back to it. Short term traders should set a maximum loss they are allowed to take each day, and once that happens, take a break from trading and go for a walk. In this case, you should consider getting out or reducing your exposure due to increased risk. As risk increases, overall exposure will exceed expected levels unless the size of the position is reduced. Once a trader has decided to take a position in a market and has chosen the right time to enter the market, it is time to decide how many contracts to buy and sell. If a trader spreads his money across too many markets at one time, the few profits he makes will be offset by the large number of losing trades. As long as these markets are trending well at the time, the job is done. Between the two extremes of over-diversification and over-concentration, traders are caught between a rock and a hard place, and there is no absolute solution. The smaller the correlation, the more diversification can be achieved. It may seem easy to grow profits to their full potential, but if a trader has the eye to catch the beginning of a market trend, he can make huge profits in a relatively short period of time. What to do? Although the trader believes that the market still has a lot of upside, he or she is worried about the price falling and losing the book profit. Or do you just sit tight and prepare to ride out the potential correction? There is a solution to this problem: Traders always trade with compound positions. By compound positions, a trader divides the units traded into two parts: trading positions and follow-on positions. If the market has reached its first target and is approaching a blocking zone, and the oscillator is showing overbought, the trader can either close out the position for profit or place a closer stop loss order. Therefore, it is advisable to avoid starting a trade with only one contract or one unit position. By trading with multiple unit positions, the trader has more flexibility, which may improve the overall trading performance.