Money management - 50% of your success!

Money management - 50% of your success!


1) Trader Level - Beginner


2) Strategy type - Universal


3) Timeframe - 1s - 5m


4) Assets for trading - Any


Money Management is a set of rules and techniques aimed at minimizing risks and maximizing profits. The correct trading strategy is only 50% of success, the other half depends on the money management that the trader uses. Use the rules outlined below in trading, and you will be able to achieve maximum results in trading.


Risk no more than 3%

A clear control over the level of risk in each trade is the first and basic rule of money management. No matter how proven and profitable a trading system is, in the event of a change in the nature of the price movement, an overestimated trade size can lead to large losses. And if the cost of one transaction does not exceed 3% of the trading account size, you will easily overcome the unprofitable period and quickly make up for your losses in the future.


Limiting possible losses per day

The second rule will help you cut your losses. Just limit their size to one day. The fact is that the trading strategies used by traders cannot work equally profitably at any time of the day and all days of the week. If the dynamics of the price movement has changed, and you start to receive losses, it makes sense to stop your trading until the next day. Losses for one day should not exceed 15% of the trading account.


Don't give in to emotions

Never give in to emotions. This is a sure way to lose money. Beginners are especially likely to fall into the trap. Act calmly and confidently in accordance with your trading strategy, even if your prediction did not come true.


Increase the volume of transactions in proportion to the growth of the deposit

If you use an effective trading strategy and manage your capital correctly, your trading account size will grow rapidly. In proportion to its growth, the size of trading operations can be increased. This will help capital grow even faster. Do this gradually and do not forget about the rules mentioned above.