Discussion topic: Money management
Successful action requires a lot of patience, good education and a host of other characteristics. One of those other qualities is money management. In this article, I will try to hit the bull's eye. I will try to explain the top 15 tips for managing money for novice marketers. You can also read the concept of this article as effective money management tips.
In order to win the deal, you eventually need a comprehensive trading plan. A comprehensive trading plan will tell you when to enter, when to exit, or the stocks / currency pairs you want to trade and most importantly how to manage your money.
What most traders don't understand is that you don't plan on just taking advantage of one store or just trading based on exit and entry points. But you also need to come up with your own trading strategy for the long term gains.
What is Money Management?
Money management is nothing more than the art of managing your working capital by applying rigorous risk management. It is a major trading activity after trading psychology, but beginners ignore it and focus only on technical analysis.
However, in order to survive on the stock market, you need to know how to manage your capital in real time. Before you get into the position, the first question you ask yourself is, "How much risk do I risk with my capital?" Instead of "How much will I earn?". The key is always to be pessimistic about your potential losses.
Because money is the ultimate necessity to stay on the market. If you lose all your money, your journey ends there.
What are the rules of money management?
It's very easy to follow the rules for managing money in trading if you can control your emotions. They also have the ability to save a lot of big losses if you watch them closely. Now let's get to know the best money management tips for novice marketers:
1) Don't act hard
Overly aggressive trading is probably the biggest mistake new traders make. These include taking a lot of influence, accidental entry and exit, high risk of capital, etc. If a small turnaround in the market is enough to clear most of your venture capital, you risk too much. The best way to get the right level of risk is to adjust the size of your position.
2) Be realistic at the time of trading
Now the reason for new traders is overly aggressive, mainly because of their unrealistic expectations. They usually think that aggressive trading will help them achieve huge returns in a short time. But the real facts are quite the opposite. You need to set realistic goals and use a conservative approach to achieve a stable return.
3) You must know your exit points before opening the position
Determine the realistic levels you want before you enter the store. This means: Your target level and the highest loss you can suffer. If you do this, you will remain disciplined in the middle of trading. This will also ask you to consider trading in terms of risk versus bonus.
4) Stop loss must be stopped
One of the best money management tips for beginners is to use Stop Loss for every transaction. Managing money means increasing your chances of living. Stop-Loss does the same for you. Since there is always a possibility of loss, you should place a stop loss order so that it does not exceed 3% of your trading capital, summing up all your current positions. I will explain this point in detail later in the Positioning section.
Always remember that survival should be your top priority and profit comes second. But again, choose a stop loss wisely so that it is neither too small nor too big. If you are in a situation where stop loss always stops, analyze your method for adjusting the stop loss level.
5) Never change your revenge
The market is superior and should never be changed. At some point, you may suffer heavy losses from your trading capital. At that point, it is normal for you to be tempted to try to repay your capital at your next trade. This is called revenge trading and often becomes deadly. This means you double your risk, and venture capital is already under pressure.
Therefore, never do it. Instead, consider reducing the size of the placement and waiting for the high probability to be set for the sample. Do not move with your feelings.
6) Always be prepared for the worst
We do not know the future of the market and cannot predict 100%. Therefore, it is important to be prepared for the worst situation and take appropriate precautions.
8) Use the handle wisely
Leverage offers the ability to double the profits from available venture capital, but it also increases the risk of large losses. This is a useful tool only if you know the impact of exposure. Brokers usually influence your account to allow you to trade with higher profits. At the same time, your risk exposure increases as it increases impact. Generally, do not use 7x again for all your stores. The less you use, the better your position.
9) Admit it when you make a mistake
The golden rule of trading is to maximize profits and reduce losses. Therefore, it is imperative that you get out quickly if you see clear evidence that you have done poorly.
It is a natural human inclination to "not admit their mistakes" and try to turn a bad situation into a good one. Unfortunately, this is not the best case for trade. So if you are having a bad time at any point, get out immediately.
10) Have a written written trading plan
You must have an existing trading plan / strategy and you must adhere to this in all situations. Your plan should include entry and exit points, positioning, money management strategies, etc. This helps you control your emotions while also preventing you from behaving too much. If you exercise all the time, this will introduce discipline to your daily trading style.
12) Use tight stop loss to maximize profits
In addition to what I said earlier about stopping loss, the concept of stalled stopping is also an effective way to improve money management. Once you start taking a reasonable amount of profit from the trade, you have to make a partial profit and offer a stop loss to the point where the trade will no longer lose. That way, even if the price starts to move in the opposite direction, your backlog will reach and you will receive a net profit.
13) Don't be too greedy
Greed is good, but somewhat. Don't be too greedy. Excessive greed can make you make bad trading decisions. Remember, trading does not mean opening a profitable trade every minute. It all comes down to getting into the right trade at the right time and leaving those stores in line with your strategy. Always try to act disciplined and follow money management strategies.
15) Read the rules above daily
We are humans and it is our nature to forget everything in no time. So my suggestion is to take a copy of this article and read it every day before the trading hours begin. This way you can take care to become an organized salesperson.