Money Management From FXTRS.COM
We recommended to our all client please don’t take over 5% risk on your total balance (equity). But world all famous and expert traders are all time suggest never take over 3% risk on total (equity) balance for trade.
Calculate For Money Management:
Show to you how easy it to calculate your position size. Let’s say if you have a $1,000 account and you have found a trade setup with EUR-USD which has to have a 100 pips stop loss. This 100 pips stop loss should equal to 5% of your capital, based on money management rule that says you should not risk more than 5% of your capital in each trade.
5% of $1,000 is $50
$1,000 x 0.05 = $50
Now tell me if 100 pips should equal to $50, what value each pip should have? That is right. Each pip should equal to $0.50
$50 / 100 pips = $0.50
So to risk only 5% of your money in this trade, your position size (the amount of money that you trade) should be chosen in the way that each pip equals $0.50.
We are going to explain the most important aspects of money management:
Maximizing to your profit is an important part of money management. If your succeed to maximize profit in your trades, you will have a better risk-reward ratio. When your stop loss and Take profit is the same, you will have 1:1 risk-reward ratio, but when you want succeed to maximize your profit in trade and your profit becomes three times more from stop loss, then your risk-reward ratio will be 1:3. It means you have risked 2% of your account to make a 6% profit. And if one of your positions hits your stop loss, you lose 2% of the profit you have made and 4% of the profit is still on your account. let’s say you have a trading system that you are 70% successful with it. It means 7 out of 10 positions you take, hit the target and 3 positions hit the stop loss. If you succeed to maximize your profit up to three times of your stop loss with those 7 positions, you will make 7 x 3 x 2% or 42% profit and your loss will be 3 x 2% or 6%. So you will have a 36% profit at the end (42% – 6% = 36%). This is a great result.
If you trade with fxtrs signals service, We give just one suggestion never take over the 5% risk on your total trading balance. Always trade with fxtrs signals service to avoid any biggest loss or balance going low. Because when you take our signals service we always take care your trade and our expert team always work to give best signals for our clients.
If you don't fully understand the implications of money management as well as how to actually implement money management techniques, you have a very slim chance of becoming a consistently profitable trader. For more information on money management fxtrs.com can help you please contact us for your money management to trade with our signals.