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    Thread: Money Management - My Concept

    1. #1
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      therisingsun is on a distinguished road therisingsun's Avatar
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      Default Money Management - My Concept

      Here we go!
      TraderGuru says and lot of many not to trade with more than 5% of your capital. The word 5% is ambiguous own its own. But moreover, that management is beyond people like us who dont want to fund our account with 2000 bucks. For accounts with money like 200 bucks in it, I am suggesting something new.
      You need to follow few points and you are done:

      1. Leverage: I would recommend as highest as possible. Insta offers 1000 times which means if you have $10, you in fact have got $10000 to trade with.

      2. Used Margin: Margin used is the amount of money you put on to open a position. It can be calculated simple way. For any pair, currency in FIRST place counts how much the pair will take margin. Second pair calculates the return on it. Now if you have account in USD, for pair like EUR/USD, say its value is 1.2535.
      For a micro lot position, it will take 1.2535*1000 = $1253.5

      If you have 1:1 leverage, you need 1253.5 as must in your account. For leverage 1:10, you will require 125.35 for that position. For 1:100, 12.535 and for 1:500 account, you need to have $2.4. For Instaforex with 1:1000, you just need $1.2535 only and your position is opened.

      Lets talk about an account with just $10 in it. As soon as you opened a buy/sell EUR/USD position, margin used will be 1.2535 from your account instantly.
      For EUR/AUD. EUR/GBP, EUR/JPY, the margin requirement will remain same as the pair has EUR in first place.

      To make this simpler, I will write down here: For EUR, its normally $1.2, for GBP, its about $1.6, for USD, well, it will be $1 and so on.

      3. What is you SL?: Say you open a position with stop loss of 100 pips. For one pip in micro account, it costs you 10 cents or say $0.1 and for 10 pips, you need $1.0 and for 100 pips, it costs you $10.

      4. Now you want to open a position in microlot account in pair like EUR/USD and account has 1:1000 leverage, you need $1.2+$10= $11.2 if stop loss is 100 pips.
      Say stop loss is $4, you will need $1.2+$4 = $5.2
      If you are in 1:500 leverage, you will need $2.4 + stoploss amount.
      If in 1:1000 leveraged account, you want to open GBP/USD position with 20 pips sl, you need $1.6+$2 = $3.6

      If you have just $20 in your account, use this very simple concept and you will never need any money management ever.

      PS: The used margin always get added back to your account after you close the position. This means $1.2 in case of EUR or $1.6 in case of GBP or even $1 in case of USD, this amount will go back as such in your account with your profit/loss. If you had 20 pips sl, you will lose only $2 and NOT $1.2! $1.2 will be credited back to your account.

      Any questions are welcomed!
      Visit my blog: blogeomics.com


    2. #2
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      Your money management can be kept organized by having a good trading plan. All currency traders should have their own trading plan and they should follow it no matter what, so that they can ensure consistency in their trading and remain disciplined.


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      Quote Originally Posted by ashishtrifid     
      Your money management can be kept organized by having a good trading plan. All currency traders should have their own trading plan and they should follow it no matter what, so that they can ensure consistency in their trading and remain disciplined.
      Yes you are right! Discipline is key to success. It covers actually all your emotions and psychological behaviours. I am trading on forex for like over 2 years and still many times my emotions beat me up.
      Visit my blog: blogeomics.com


    4. #4
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      Money management is the most important thing in Forex trading. I have read enough articles about it but still I do not miss a chance to read about articles that talk about money management. This is an another example of money management article that I really enjoyed reading.


    5. #5
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      Quote Originally Posted by sharabela     
      Money management is the most important thing in Forex trading. I have read enough articles about it but still I do not miss a chance to read about articles that talk about money management. This is an another example of money management article that I really enjoyed reading.
      Thank you Sharabela for enjoying reading this. Hope you learnt something out of it and it would help you in your future trading. Yes you are right, money management and emotion controlling are indeed important factors in trading forex!
      Visit my blog: blogeomics.com


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      You are right.It,s a really a great money management system but the problem is that how we can follow it by controlling our emotions.I think ,whatever strategy i take ,is spoiled by my emotion.I wish ,i could be a trader like you


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      Quote Originally Posted by MD ATAUR RAHMAN     
      You are right.It,s a really a great money management system but the problem is that how we can follow it by controlling our emotions.I think ,whatever strategy i take ,is spoiled by my emotion.I wish ,i could be a trader like you
      Just one thing I will have to say to you here - do not follow your instinct in forex, what you need to follow is the trend only. Look for the trend on daily chart and open position always only in the trend.
      Visit my blog: blogeomics.com


    8. #8
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      Quote Originally Posted by therisingsun     
      If you have 1:1 leverage, you need 1253.5 as must in your account. For leverage 1:10, you will require 125.35 for that position. For 1:100, 12.535 and for 1:500 account, you need to have $2.4. For Instaforex with 1:1000, you just need $1.2535 only and your position is opened.

      Thanks for this information as trader we must be concerned about our leverage the greatest feature of instaforex that i like regarding leverage is trader have full controll over leverage at any time he can change his leverage even many times a day which give more control to trader to get grip over investments,


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      in a proper money management how can you use the high leverage? do not try to use the maximum trading leverage. i hoe it is not right to use more than 1:200 leverage.


    10. #10
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      management of the money we had to do before we do the trade, so we avoid a lot to lose, and also the most important thing we have to use a strategy that is completely under our control. because if we do not master a good strategy so we will also be easy to lose.


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