Why Daily Forex Trading is Favorable?

When novices get into forex trading business, they likely to think that it is easy to make maximum profits by spending a minimum amount of time. However, these type of trader quickly become chart/market obsessed and spend a notably large amount of time watching for price fluctuations, thus—in some case—leaving their family and professional lives behind. We will see in this article how to manage your business while maintaining a normal life and free time. Please note this presumable advice, it is better to get off the market more than losing your beautiful life instead.

For those who are beginners of this foreign exchange (forex) market, it is advisable to always stick to far longer-term charts such as daily or even weekly. Even if this category of trading is not reserved for beginners, it suits them better because it allows continuing one’s personal activities and at the same time to keep their “me time” as well.

The advantages of daily chart trading compared to the shorter time frame is explained in follows:

  • Less volatile and Easy to be Analysed. By keeping daily or weekly charts with your trading activities you will avoid sudden fluctuations in intra-day charts and be able to predict the market trend far more accurately.
  • Keep Your Life Healthy Psychologically. A trader who based on daily and weekly charts allows themselves to keep their current lifestyle. Indeed, you only have to look at the charts once a day—especially at the end of the day (even you can switch it any time that suit your schedule) to place your entry order and to manage your investments. By this means, no necessities to keep your nose glued to the computer screen.
  • Once in a while set up, and “everything” will be okay. By adopting the daily trading method, new-bee can still keep their jobs and thus maintain a normal life. Indeed, thanks to it that you place your orders once a day and then continue whatever activities you will do next. There is indeed no reason to monitor the market all day long—only checked it once in a while if you like—if you have correctly placed your “take profit” and “stop loss” orders.
  • Once again, Simple and Easy. Last advantage of daily trading method is because of its simplicity and ease. Indeed, these kind of charts are much more reasonable than very fast intra-day charts especially when you have not mastered your trading system out of your head. Traders can, indeed, take a longer time to think before embarking on the entry of transaction or leaving the market.

In the nutshell, the daily or weekly trading method is ideal for a beginner since it allows you to practice trading activities without becoming a real “geek” who does not let go of his control screens. An ideal practice in short to maintain a personal and professional life.

Is Trading Using a Smartphone Preferable?

You might get advertisements from brokers where they provide a platform that works well on smartphones. Yet, does trading from a smartphone really make you closer to profits throughout the day? Or vice versa, this method will only make you sink with the inevitable losses?

Here’s our view as a market player who has been playing for a long time, both by using a personal computer (PC) as well as a smartphone. The article below may become additional information thus you will easily consider whether it’s necessary to install a trading platform to your smartphone.

First Thing to Consider: Freedom of use a.k.a Flexibility

Trading in your hand, that’s the jargon that is usually used by brokers to attract you. That’s right, you will find it easier to make transactions on the trading market simply with the application at your fingertips. There is no need to look for a power outlet for your laptop, or internet for your connection. You might just have to do a few touches on your mobile screen and your transaction is executed.

For flexibility, of course, trading using a smartphone is much better than a notebook or PC.

The Second: Screen Dimensions

For some people, it is rather difficult to do an analysis from smartphone screens that tend to be narrow. It is not easy to read numbers or interpret lines formed by indicators. In addition, in our experience, the screen ratio is also very influential on the appearance of the trading platform. You may not believe it, but we have experienced that the angle and slope of the line tend to be different between the screen of the smartphone and PC.

For our business, we tend to choose a PC or notebook screen. However, the wider the screen will make it easier for us to read. Notebook / PC wins in this matter.

Last but not Least: Features

It must be admitted that the development of the trading platform on smartphones is not as sophisticated and up-to-date as its compatriots in Windows-based or Apple-based computers. Lots of features are trimmed or intentionally not to be developed for the Android or IOS platforms. Of course, this is also related to the hardware that has different capabilities and performance.

For fans of the custom indicators, it will be difficult to implement their strategies on the smartphone screen. Conversely, for those who only base their trading system on the default indicator of the application, it is certainly not a big problem.

Regarding the third thing, we prefer to give a plus on a computer-based platform.

Conclusion

In the nutshell, for those of you who really do not need a lot of supporting features and are more concerned with the speed of execution, the choice of trading using an Android or IOS based platform is certainly an attractive choice. However, for those of you who like details and various supporting features, we recommend that you stay on a computer-based platform.

The rest, keep in mind that the longer you are exposed to charts and markets, the greater the risk of losing your money. For this, we still recommend … as far as possible avoid excessive trading.

What is the difference of Forex Brokerage from the Ordinary Money Changer?

Firstly, there is no very basic distinction between online currency exchange/trading and the ordinary money-changer. Generally, both entities benefit from the spread. Spread is the left amount after subtraction between the buy-sell prices. Spreads between various institutions may differ relying on company policy. However, basically this is how this business goes.

Forex has its leverage mechanism. The existence of leverage, among others, is the most point or way in which physical exchange of money at the public money changer and forex trading are not the same. The mechanism of leverage allows buyer-seller to make high volume transactions with small investments. Thus, high gains can be achieved even in small movements in the transaction parity. The highest leverage ratio allowed in most country is 1: 100, which means that the investor can make a transaction with 100.000 USD with a guarantee of 1,000 USD. Yet, sometimes there are small broker offer higher leverage to attract consumers. The highest leverage offered by broker until this article published is 1 : 3000.

Another contrast between money changer and foreign exchange (FX) market is that the last is a bi-directional market. In physical market, we can only sell if we have goods (in this case, physical money itself). It is barely possibly to sell no money to changer office. On the other way, in order to benefit from the rise of an opposite currency pair, we may also make a sale transaction to take advantage of the decline as we do the buying transaction. For example, USD / TRY: 2.9000 level and we think it will drop by selling a sales process, we start to make profit at the moment when the parity starts to fall below 2.9000. Taking the resident producers in Turkey get out of raw materials bought dollars at time t, t + x is the risk of falling dollar prices at the time. Because the raw material at a low price can be purchased at a high price. In order to hedge against this risk, Forex markets have a sales position in USD / TRY parity so that even if the dollar falls, it gains a profit and avoids risk and is called a hedge.

Forex can be invested not only on currency pairs, but also on commodity products and indices such as gold, oil, copper and silver.

One of the major advantages of the FX market is the possibility to process data instantly. Forex market is open for 5 days and 24 hours. Therefore, currency can be dealed almost all the time (except when holiday). There is no opening and closing hours such as money changer office. Forex traders, for example, are expected to see a change of prime minister, resignation etc. when there is an unexpected event during the night. they can instantly evaluate the data and gain a change in the parity.

Forex markets are not physical. The physical delivery in the purchase-sale transactions is not applied. Traders do not need to take the high quantity of money to the changer office for trading. One can perform transactions by sending orders via the internet whenever and wherever he/she wants. When the investor wants to sell, the buyer finds the opposite because forex is the world’s largest financial exchange-market where daily sum of exchange overreach USD 5 trillion.

Four Steps Closer to A Success in Trading World

If you want to be successful on the foreign exchanges, you need a plan. Best of course, one of the works. The most important requirements are discipline and a high degree of honesty. The aim should not be quick money, but a long-term increase in capital. If security is paramount then more than just good market analysis is needed. It requires a well-thought-out money management. This guidebook shows what investors need to pay particular attention to and how to achieve much better returns with simple means.

To correctly assess risks
Investors should not sit out all the ups and downs of a currency. A major slump can throw the entire portfolio off balance for years to come. Even if it comes in the following years to strong profits, such a price slide can not always compensate.
High losses should therefore be avoided in any case. After all, a pair that drops by 30 percent needs a 43 percent recovery to make up for the loss. High fluctuations therefore become very expensive for the investor. Here comes an old market wisdom to bear: losses must be stopped and profits will continue to run. This applies to every single item contained in the account.

Stop courses with technical tools set
In the case of graphs, stocks , indices , commodities, or currencies, investors often notice particular price levels. At this point, the course changes direction very often. If these areas are undercut, this makes the chart technician eavesdropping. Because in this area many stop courses were placed. Investors sell when the price falls below this mark.

Use trailing stops
The trailing stop is an automatic, permanently traded stop loss order , as it is now offered by most banks. As soon as the value of an index or share rises, the trailing stop is also adjusted upwards. If the desired object sinks, the trailing stop remains unchanged until the index has reached a new high. If the currency price falls below the set line, the securities are sold immediately. The investor does not have to worry about anything. Thus, trailing stops are an important tool in money management.

Be sure to reduce risks
As already mentioned, it is very difficult to compensate for strong price falls. Therefore, in the context of money management, strong loss-makers in the deposit should be avoided at all costs. First of all, however, investors should be aware of the losses they will be able to get over financially throughout the portfolio. Do I become nervous even at a minus of ten percent or can I also take a minus of between 15 and 20 percent.
It should be noted that not every investment behaves the same way. With regard to the price fluctuations, there are clear differences. Therefore, it makes no sense to apply the loss limit established for the entire portfolio to each individual investment. It is better if the risk appetite of the individual parts is represented by their volume.

Charting Strategy – Forex Strategy for Traders

One who decided to be a Forex trader need to be concerned with charting in order to invest in a good price. It is important to be extensively involved with the latest techniques in order to have a solid knowledge of when to invest in a security. The chart technique basically allows a good prediction to discover a corresponding course for themselves. Beginners use different brokers to get a good start into the charting technique. After all, a little background knowledge must be available, how to deal with the chart s and what signals must be respected.

The technical analysis
The technical analysis is an integral part of the financial markets. Since the beginning of the twentieth century, investors have tried to capture particular ratios of values and thus to ensure that good entry opportunities for trading are found. Extensive studies are used to clarify fundamental key figures of a market or a company and to use these for forecasts. Price progressions are statistics that lead to clear signals using the indicator analysis. The basic assumption of the charting technique is that the past price trajectories of the past are repeated. Professional traders have noted points in charts, which must be kept as special instructions in mind. Important methods in the charting technique must be taken into account in order to be able to continue to value the course. Especially the following point should never be forgotten.

The trend is your friend
The basic rule for the charting technique and the analysis of the technical data is the saying “The trend is your friend” . This proverb is used permanently in chart analysis to make it clear that you should not oppose a trend. Striking movements should not be strengthened in their opposition, as the same trend direction is usually maintained. If a stronger movement should be the case, it is a turning point, which is signaled prematurely. Different extreme points are marked in an analysis in order to recognize significant changes early on. If there is a series of trends with many highs, a downtrend can be detected. But alsoSideways trends are present when a course is on the same summit for a long time, making only light swinging movements. A straight line can then be introduced to the charts, which gives a clear indication of a sideways trend. Basically, charts can run in three directions:
1. up
2. Down
3. Sideways
These movements can be detected in the chart analysis with different tools. Mostly the Bollinger Bands used to ensure high, medium and low stock price marking. It is important that the different trends are clearly defined, thus ensuring that the trend has a longer validity. A trend is then present until it breaks through the price charts and can be seen below or above the curve. It is important that the outbreak only happens after use. Here it is sufficient that the course is noted once a day in order to detect possible changes. According to experts, the last markings should be carried out after the closing price. Other experts see a trend as completed only when the price is up to three percent below or above the trend line that has existed so far.

Highs and lows
When analyzing the current prices, the high and low points are usually considered a bit closer to define trend lines. When it comes to securing and fixing price targets for a stock, the highest and lowest points can be used as a good guideline. If a chart assumes a downward movement, then a low should be detected, which develops from the point upwards. The low usually uses a support. Courses can rotate frequently and develop against a trend line.Once the price has changed, it usually will not change again. Support in this context is stronger the more it has served as a turning point. This can be recognized directly, if the past of the current values continues to be looked at. In addition, the price history is often repeated, which is why chart analysis experts would like to look at the past history of the course to make forecasts. The analysis should not only look at the values of a course from the last hour, but it is also important to look at the values of the past few days. Depending on the forecast period, the last period should be considered closer to use similar values as support.
The specialist uses resistance as an important factor in the analysis of a chart, which can help in the analysis. For this purpose, a resistance line is drawn, which is used as an obstacle within an upward movement. In a long-term chart, a breakthrough can be well recognized . For future charts, it will usually be hard to skip a certain area permanently. However, if the break of the resistance line can happen, the drawn directive can be used as a support line. This swap is a secure methodology for chart analysis. It should be noted here:
• Like previous support, the uptrend line can turn into a resistance when it has broken down
• Resistance lines and downtrend lines serve as support for the course after a breakthrough

When is a trend over?
Most traders do not just need to know when a trend starts, but when it stops. It will be asked what indicators for this findingmust be used. Some formations that can be recognized in a chart confirm a trend reversal. This includes the V formation. This term comes because of the sudden potential trend reversal, which can lead to a rapid downward or upward movement. Countermovements seem to look like a V quickly, which is the case in a fast rise. On a descent or fall of the course an A-formation can be seen. Of course, for the trend change, a reliable use of important indicators should be used to quickly detect a possible reversal. In practice, the constellation in this formation is relatively common, so shareholders should be more concerned with the specificity of the formation.

The double bottom
The double bottom is an indication that the formation, which can also be considered the letter W, can be seen in the downtrend. Investors will recognize by the scheme that it is a rising pricewhen the W formation has been completed. The double bottom denotes the double top, where there are two lows, a short rising rebound and another low point. The course floor is not extremely blasted, but the ground is stable and remains in the almost identical values. After the medium recovery has taken place, again a decrease can be detected, which is then associated with a sudden slope. This formation is relatively common, but most will be seen in monthly views, not on individual days.

Another 15 Rules for Trading in Forex (Extended Version)

In the previous article, I explain some basic rules in order to be a good trader. Here is the next 15 advanced rules that probably beneficial for you to develop yourself in forex trading world. Please always keep in your mind that other’s strategy won’t be match to the others. Above all rule, please Be Your Self! Everything will be returned to each person. While you find out which rules are most appropriate for you, consider some things that you can make reference to.

RULE 11: It is always be the best to close the position as soon as possible.
You have opened a position and persistently increasing the damage. In this case, immediately close the position and after a while to think that your loss will come back, or you can reduce your losses by doing more and more transactions in each loss may cause dangers. Close the position and settle for damage.

RULE 12: Don’t expect or pray for something.
Forex is not an instrument that can be condemned with prayer. Because of the nature of the work, people’s belief that psychology of things will somehow get better again causes their losses to increase. You’re alone, no one is helping you, your only helper is to be reasonable and your loss is going to return to the land instead of digesting the damage and taking profit from other transactions.

RULE 13: The market is very dynamic, don’t deal with the news. News is the date from which they were published.
When news comes out, it is either reflected in prices or reflected in prices until you do. So instead of trying to gain immediate earnings by following the news (because this gives rise to the greatest potential for harm), try to understand the market and how it works.

RULE 14: Don’t be a speculator. Don’t be a big earner.
Do not trade with the promise of very large earnings. Don’t fool yourself or anyone else. Processes that are perceived as edilerek scalping sonra in the market are usually done in 5-10 minutes after opening and 5-10 pips. However, the attempt to obtain 20-30 pips several times a day, which is actually a higher level, should be called olan scalping Ancak. You create your strategy in this way by giving weight to the process. Earn less, but lose less when you lose. If you have the right strategy and only 2 to 3 of your 10 transactions are closed with damage, you can get a tremendous return even in a few months. At the end of a trading week, try to double up in a month rather than trying to increase your money to 10 times. In this way you have the opportunity to be rich at least in one year.

RULE 15: Love losing money!
This rule may not seem logical to you. However, gold is in the rules. You can have transactions that result in losses as well as your profitable transactions. By accepting this, reducing the amount of loss in the resulting transactions, ie, agreeing to the loss of this will affect your overall performance positively.

RULE 16: If you are not getting results in a certain time period, close that process.
You have a prediction when you do something, and this prediction may take time to take place, but when you foresee a day that will result in a day, you still have to face the next day, if the position is too little or too little damage and you can’t get results.

RULE 17: Never experience great loss. (See Rule 5, 8, 10, 11, 15)
Great loss will have a structure that will lead to greater harm by affecting your psychology in a wrong way. The great loss is something that will completely destroy you, and you must stay away from it. Unless you have a very wrong strategy, if you do not act with a very low stop loss level or the use of a wrong leverage supported by large spreads, you will not be constantly harmed. Often the loss and general catastrophe happens with one or a few large losses resulting in great damage.

RULE 18: Small gains can make you rich.
Only a few 10 pips to 20 pips a day can make you rich even with a low capital and low leverage. If you can achieve this, don’t look for another way to get rich or gain much.

RULE 19: Do not expect to perform exceptionally profitable. Be reasonable.
Many people in the Forex market miss the opportunity to obtain reasonable income with the expectation of extraordinary earnings. It is unlikely that a statement of the FED about the market will bring your position to an enormous level of earnings. Instead of acting with this expectation, be reasonable and always make reasonable profits.

RULE 20: Regular income and controlled movement is very important. Ensure that your income is stable and continuous.
This rule is about getting regular and reasonable and controlled income every day. Do not allow control to be on the market or in your ambitions. You must make sure that even the worst scenario will not ruin you.
Don’t look at the way the rules look similar, all say something different from a different point of view; Of course you can be going out the same door.

RULE 21: You should behave differently with your lost positions and closing your lucrative positions.
Close the entire lost position at a pre-determined exit point after a reasonable expectation level. When you are in the position of your first expectation, try to reach the rest with the rest and the main goal.

RULE 22: As you build a wall with brick, continue to apply the winning strategy to your principles.
If you have a winning strategy and you are able to make reasonable profits every day, continue to earn reasonable with this strategy, and continue to gain the same type of transactions in the same way as you weave a house wall with bricks as long as there is no development that will change your strategy.

RULE 23: Do not change the horse when crossing the stream.
Apply this after you have opened a position that fits your strategy and identifies the points of departure where you will be lucrative or lost. Never again do analysis and play with your position. You are damaging your reasonable strategy, which you may have in the beginning, and you eliminate the possibility of making a profit.

RULE 24: Turn the terms in your favor.
All traders are at the same zero point when the transaction day starts. However, those who follow the rules and hold their stance in a stable position can win.

RULE 25: Believe in the power of the market.
The market always finds the truth with its dynamics. It is not affected by individual thoughts or processes of people. You stabilize your posture and decide what to do. The market is then helpful for you. It is a grinder for those who do not know what to do.

10 Basic Rules for Trading in Forex

There is no single generic recipe that will make a person become a profesional trader and make thousands of dollars overnight. However, there are several rules that can be a reference so that a trader is always in the right corridor to get to a successful investor/trader. Here are some rules that might be adopted so that you become a successful trader.

RULE 1: Making a disciplined transaction increases your profits.
Always act disciplined. This increases your profit while limiting your losses and you can make a net profit in total.

RULE 2: Act disciplined without exception in every process.
Imagine a smoking man who wants to quit smoking. This person has moved away from cigarette smoking for years. However, occasionally, one cannot take a single cigarette from time to time. It is not possible to say that this person quit smoking; at least one cigarette a day is still smoking and its health is threatened. The person who trades in the Forex market and has a good strategy, in addition to nine of every ten movements, adheres to the trading strategy and the discipline it determines; however, it may cause serious losses if one performs only one non-undisciplined operation in one of the ten procedures that is not in accordance with his strategy.

RULE 3: After the process of loss, bring your transaction amount to a lower level than normal.
Harmful processes have always led to more harm. If you’ve done a malicious procedure, reduce the amount of your process to half of the amount you normally trade, or even up to one-fifth if possible, until you return to your normal earnings range.

RULE 4: Do not turn your lucrative transactions into aggressive behavior.
You have found a profitable direction and you have earned a certain amount of money in this direction. In this case, you will be out of the market by calculating and closing the position at the appropriate time for your strategy with the profit to finalize this process. Don’t push the lot in order to increase the number of points or position the most profitable peak and make maximum profit.

RULE 5: Do not allow your biggest lost to avoid your most profitable operation in a given period.
Let’s say you’ve done 15 transactions in the last week, and 5 of these transactions have resulted in damage, which means that you have the potential to do a great deal of damage if your damage is the most profitable. As a rule, do not allow this and do no more damage than the profit you have at your most profitable position in a transaction.

RULE 6: Identify your methodology and follow it 100%.
Determine your transaction methodology. Follow 100% of this methodology during the day when applying what kind of action you are going to do at what times and what kind of rules you are doing.

RULE 7: Limit your daily loss.
Imagine that your fund has $ 5000 USD in your account, what is the amount of log loss in the logic boundaries, do you think it is 500 USD? In all cases, ensure that the total risk of StopLoss does not exceed 500 USD. When you reach this level, turn off your computer and rest for a while and start processing again the next day.

RULE 8: Get your current level to increase your transaction amount.
Imagine you’re dealing with 1 lot. At this level, do not go to 2 lot levels for a long time and before you start to make profit regularly.

RULE 9: Learn to terminate your lost and accept the damage.
Let’s say you open a position today and you’re hurting. In order to terminate your loss (do not misunderstand immediately in the opposite direction, please do not misunderstand) you do not need to catch the StopLoss level. Before this level is reached, you should be able to close the process by saying “OK, I am not on my successful day today”.

RULE 10: Be yourself, don’t be anyone else!
I do not go out of the range of 10-20 lots per day in my transactions; I often know that people who are more ignorant than me and those who start to do new transactions earn 100 bucks and make a lot of money. But, at the moment, I know that the lot count that will allow me to move comfortably is between 10-20 lots according to my transaction strategy and psychological construction and I am not going out of it. Find your own circumstances and best situation fits to you and take action on the appropriate conditions for you.

Frequently Mistakes in the Forex Market

Here below a list of some oversights (of course not all mistakes possibly done by traders) that are often made by traders whether intentional or not.

  • High Volume Operations: Leveraged transactions require a different risk perception than in the spot markets. The proportional difference (leverage) between your transaction size and your master is a factor you must consider. Taking positions using the whole or the majority of the capital in the Forex market may cause you to lose your capital in a short time.
  • Determining Levels of Profit and Loss Stop: As it should be, if we are moving within a strategy, we have a target price when we are in position, and in case the risk is realized, we determine the price at which our position will be closed, how much loss we will incur, and profit and loss stop orders.
  • Carrying the Position in the Loss for a Long Time: If we do not determine the level of loss in advance and we are carrying our losses for a long time with the expectation that the market will return to our favor, our capital can dissolve to a great extent.
  • Getting out of the profitable position in a short time: As an investor, the reason for our loss is the profit expectation and we want to maximize our profits. Otherwise, we cannot finance our losses and we will have to witness that our portfolio is shrinking. If we don’t want this to happen, what we have to do is to wait as long as we can in our profitable positions, to move our stop orders into the appropriate level, and to use the loss stopper on the trail (trailing stop).
  • Making Emotional Decisions: All traders are expected to be free of emotions without exception for a forex trader and the hardest part is always to make isolated decisions from emotions. We will be successful to the extent that we can maximize it.
  • Making Transactions to Be Done: Trading in financial markets is a serious business that requires attention. Rational investors are aware that non-serious transactions will not offer regular earnings.
  • Makingvery short- term transactions: It is not difficult to build a system with very short-term forecasts, but it is a very difficult and stressful task that requires follow-up for any investor.
  • Making an action without gaining experience: Starting a process without creating a profitable strategy with trial accounts can be the most costly way to learn how to trade.
  • Transacting Based on Single Indicator Reference: Only single indicators are not sufficient references for buy-sell. Indicators are used for confirmation purposes when entering the position after the line-up analysis.
  • Unplanned Action: All movements in the market are assumed to be irrational. In such an environment, one of the important requirements of not losing is to have a plan.
  • Not Stopping the Stop Level: If we change the stop level because we are afraid to face a growing loss, this may be a harbinger of greater damage.
  • Acting independently of the strategy : The most important part of a strategy is a loyal practitioner.
  • Very Frequent Processing: High transaction costs means high risk. However, frequent transactions can be exhausting and stressful for the investor.
  • Moving with sensations : If we are just entering the position with sensations we are very likely to be wrong. Rational decisions need to enter the position.
  • Opening a position within sufficient informatioIf we think that we have insufficient knowledge, we should practice until we feel sufficient and we should get support from others for our deficiencies.
  • Excessive self-confidence: It is desirable for the investor to trust him / herself, but it causes us to not be able to analyze our overconfidence errors and not to accept that we can be wrong.

 

Money Management – What is to be considered?

Under Money Management (MM), the correct classification and investment of your own money is considered. It is often not just the appropriate and necessary strategy to think about. Rather, the successful traders have come to success due to their MM strategy. Mostly not the big fund or investment is made, which is put on a single share. Rather, the right division of capital must be considered to deal wisely with losses. A good money management strategy deals well with individual losses. The loss is limited in order to have enough capital after numerous failed attempts to carry out further experiments. This type of action also gives rise to risk management. Basically, every dealer has the goal to increase his money. However, this is only possible if the losses are compared to the profit. The goal of MM is maximizing profits and minimizing losses. Of course, the two sides influence each other, which means, however, that a smart need for action exists. To pursue a good money management strategy entails a higher total income.

As mentioned before, there are different strategies to start with money management. There are three types of capital management, which are worth mentioning:

  1. Core Equity Method
  2. Total Equity Method
  3. Adaptive Core Equity Method

In the first method, the Core Equity Method, it is an approach that assigns an amount to each position opened that is subtracted from the total fund balance. If a balance of 100,000 euros is available, only 5,000 euros should be added to a selected position. This means that 95,000 euros would be available for other positions. If another position is to be opened, a capital allocation of 3,000 euros can be made. This amount must be deducted from the capital in order to use a remaining amount of 92,000 euros. This core capital method, also known as net balance, is widely used in the market.

In this type of variant, the Total Capital Method, all available capital is added to the speculative capital. Everything is lumped together, including profits and losses. With a starting capital of 100,000 euros, a profit of a share of 2,500 euros is added to the balance. If losses are made, they will again be deducted from the total balance. Due to the waiver of the net amount as in the first method, the whole 5000 euros more would be available for trading.

The last method, the Adaptive Core Equity Method, is a combination of the last two methods presented. This combination requires a MM of capital allocation in the core equity method. Subsequently, this allocation is adjusted to the increased or decreased risk. If you start again with a capital of 100,000 euros and invest in a position with 5000 euros, the residual speculation amount of 95,000 euros can be used. If the price moves in the direction of your own position, the risk on the entry price can be reduced. In addition, if a stop loss is introduced, the risk of losses can also be reduced.

 

Money Management – Protecting Your Fund at the Very Start

Thing that sit comfortably in the first list amongst the most significant errands of money management (MM) is the use of the available fund in a targeted and planned manner. This prevents traders from using their money because of emotions, which in many leads to losses. For this, traders without MM often forget the formation of reserves , which are of great importance in certain situations. If trading is just out of the feeling, Forex are more likely to be a game of chance, which they are not.

Scatter capital and use it purposefully
One of the biggest mistakes in Forex is putting all the money on an option (capital protection). MM plans to distribute bets across multiple options. If possible, this should have different terms and different underlying types. Furthermore, only a certain proportion of the existing capital should be put on a single option. Experts advise beginners to invest a maximum of between 5 and 10 percent of the credit in the purchase of an option. Even with several lossy trades there is still enough money left to trade.

Stay realistic and do not act out of boredom
To have a good MM, it also needs to be realistic. Although returns of up to 500 percent can be achieved with a single option, the rule is not. So it is much more promising to trade with smaller amounts and thus to achieve continuous profits. With this strategy, potential losses are not so high.

If there are no trends over a period of time, traders sometimes become impatient and speculate on some underlying asset. However, this only rarely succeeds. The same applies to acting out of boredom. After all, this is about the use of real money, so play, fun and excitement should not be in the foreground. In any case, the MMstrategy is one of the most important stock market strategies , which you can do for your success with a simple formula that aims to minimize the risk.

Always follow your own strategy and comply with rules
The basis for successful trading with Forex is the right strategy. This should be carefully selected and strictly adhered to. If uncertainty exists as to how well an order fits the chosen strategy, it is better to wait. As soon as there is a risk that a rule will be broken, it is advisable to take a break. Then it can then enter the market with a clearer head again.

There are many strategies when trading stocks, which can be taken into account and used. At the same time, however, it is important to ensure that your own budget is not overburdened so that you can continue to act actively. While most experienced traders are already experienced with money management, beginners who tackle a trading platform are often overwhelmed. They do not know exactly how they should proceed and what special features they have to observe. For this reason, not only are technical indicators to be considered, but at the same time, MM is an important factor to analyze in order to keep a budget permanently stable. MM has some basic rules to keep in mind. In addition, analysis methods must be combined with the MM in order to be able to benefit from the best results.