Method of Money Management greatly relied upon by traders as a way to bridge from excessive risks. Along with the changing times, the strategies used by the trader has a unique way and vary. However, each trader is required to have the option to use Method of Money Management. Some of the method that have been used Method of Money Management traders include:
The method relies on a whole accounts for funds used in the transaction. Enough risk to make a profit, but the resilience of funds used sometimes difficult to be controlled by the trader.
You do this by taking into account current capital. With a capital of $ 100 you can trade as much as 5 times the resistance of 20 points with a volume of 1 lot. By utilizing the entire capital gain is likely to reach a maximum. But at other times, the transaction can be a disadvantage, it can spend the entire capital.
In addition to the use of the lot, there are many traders also use this method to implement the strategy of averaging or martingale. Once transaction losses large enough, then the entire balance will be forfeited.
If at the contract unit utilizing all the funds in the transaction, the method divides the capital in the transaction. This division is intended to reduce overall losses or capital loss on a large scale.
This method can be done by dividing the capital into several units. For example, have a credit of $ 100, then you can divide according to their wishes. If we divide into 10 parts, trading may be mentioned that you use a maximum of $ 10 from each transaction made. So there is a difference between contract unit with equal unit where the funds are divided, regardless of whether you are trading, but each transaction is limited to $ 10 according to the example above.
Percent of Units
For those traders who like to save, so this way is often used in all types of transactions. First, you have to calculate what percentage of funds to be deployed to market. And few percent is not bound, it all depends on each trader.
For example this method, we take 0.5% of the $ 100 total account balance. Then you just spent $ 0.5 in the event of a loss. So here must take into account how many lots that will be used and what percentage of profit to be achieved.
Transactions on a large scale if volatelity price increase. However, if no volatelity or movement, then the transaction used mediocre or tend open position with small lots.
Disadvantage if at the time of profit, we will benefit very much. But when the price against the transaction, the loss is also very much available. How to use volatelity unit is almost the same as using percent units.
Lots of Money Management Strategies and method that you can use in a transaction. Just choose which one you will use to generate profit. It depends on the system you use, if more than one transaction utilizing the contract unit choice. But if you want to save and the more secure the percent of units as a solution.
Thus a brief description of our on Method of Money Management. Hopefully, reading this article Method of Money Management can give you the knowledge to you.