Generally, there’s some truth and some myth about managing your capital in trading. Effectively, there’s relevant information about fund management as there is on the other hand worthless information that will not bring success in trading. The reason is obvious: each amount of investment in traders’ accounts will be different. And engagement to take risk will be different depending on the trader as well.
This fluctuation is due to an initial fund in question and to the level of skill of the trader.
What helps us manage our funds well in trading?Everyone knows that money management is a must to succeed in trading. However, most traders don’t spend enough time on elaborating or planning the money management. In this article, you will find out what would be the best professional perspective on money management in trading and we’ll also mention the ideas that can fit it.
After acquiring experience in that, we finally understand that most traders (after our investment) need method – Fund management – Readiness spirit.
All this reminds us to have a good working methodology, a good management practice, and a good intelligible approach.
Method Recognizing a method, requires to use Technical Analysis, Fundamental Analysis, Graphics, Market News, and a practical elaboration of a good strategy.
Rules for Management Control To manage an investment fund, you must set a specific amount of money for each currency and each trade. Note that it’s important to use stop loss, and choose the amount of time to trade per day. All these practices will depend on the trader. As for mental readiness, let’s reject fear and greed, but let’s not forget discipline. So with these three big points in mind, we are encouraged to create a perfect harmony between discipline, analysis and strategies.
Psychology in trading Without emotions, life would be devoid of color and depth. But actually, in trading business, any trader can have success directly on how much he is able to take control of his emotions. That's why trading on a demo will never teach some beginners how to earn money in the market, simply because there's no emotion in demo-mode. Feeling of disappointment after losses is revealed to be one of the key factors causing a bad money management in traders’ accounts. Because, by trying to recover losses, they finally break their accounts. To get success in money management, all traders shall always be neutral, and get ahead without being influenced by some bad intuitions and emotions.
What are then the other advice?
Evidently, traders look after risk free buy or sell positions. Some people thinks it’s an opportunity to make much money. Is it good to see things this way? Indeed, it’s better to keep neutrality in trading. It is true that some predictions might seem successful, but the most important is to assure security in our accounts.
How to reach for it?
To succeed, we must first manage our risks. Effectively, risks management is a key factor and it is compulsory for big success in trading. So, as a real professional, let’s spend more time looking after Take profit rate and Stop loss rate. Because, a trader can be 99% right and lose money; and 1% right and gain money. That’s why Alexander Elder said:
" Trading goes like a high volatility movement "
Let’s then build a good method:
To get a good method established, we must learn to do good technical analysis, fundamental analysis, follow and practice a good strategy for the funds management.
Generally, technical analysis is a study and a deep reflection that work with the help of trading tools. These tools are used to evaluate the market with the intention to predict future price movements of currencies. Of course, it requires to look ahead statistics from the activity of the currency pair, comparing price movement and volumes. So technical analyst base on graphics and many other analytic tools to check out strength or weakness in security and forecast future price change. Therefore, funds management appeals to take all this into account, then we’ll get a real success. Whereas, fundamental analysis helps traders examine their predictions. Fundamental approach is based on a deep and global study on the economy strengths. It’s important to predict future prices and market growth. With that, we often guess if the price will get higher (Bullish) or lower (Bearish). Fundamental analysis is made under different aspects: reflection on economy market, investments effects from industries, and worldwide business. Considering reflections and market news, we can specify the real current rate of stocks, so we determine if they are overestimated or underestimated. Henceforth, we’ll get to predict future rate of stocks and currencies to better manage our investment.
So, risk management helps us build a perfect discipline which consists to identify, prioritize investments. By doing so, we’ll know when there’s a great opportunity to trade and when we must anyways abstain ourselves. Then, as a trader you will learn how to deal with risks carefully, measuring up your investments in a correct method. All this pushes us to have a good plan for our trading activities.
Globally, we could admit trading is like hunting our preys or shooting on our target.
As the veteran Sun Tzu declared:
" All battle is overcome before it is to begin... "
The statement implies that planning and building strategies can lead to win wars. Successful traders know that a plan is necessary to generate extra income. Even in our daily life plans guarantee success.
To sum up, risk management is the first condition to think about, though many traders neglect it. To make your orders successful, one must build a suitable discipline. A good trader generates much profits in his lifetime. But the imprudent trader can make extra losses because of a weak management. If a suitable risk management is not applied, making money might remain a dream. Be careful, and go into trading with a good management of our funds. Then once and for all, we’ll find encouragement and certainly gain much money.
