Trading without safeguard is just like sky diving without a parachute. Initial margin or initial margin requirement is cash or marginable securities that the investor must pay for purchasing securities. Money making is not a matter but we must preserve the money that is the main thing. For that we should follow some money management techniques. In order to protect the portfolio of a trader, he/she should include money management techniques to their trading plan. This would be done by a serious trader. You will inevitably lose your money, if you do not implement a money management technique while trading. You must strive hard to protect your capital once you identify how much you care your real trading account. If you really want to protect your account from huge losses you must replace all your human advice for profit. The reason behind this is you have to survive a lot to win. In order to limit your risk and loss you have to marry a professional money management scheme. This can be achieved by constructing a sound trading plan and cutting edge system. Along with this you have to overcome a high-level competition, transaction costs, the element of volatility and randomness, and control human emotions like greed and fear, avoid false expectations, log on knowledge to overcome your inexperience.
“Position sizing” is an effective money management strategy. As its name suggests it consists of determine in a particular trade what size position you are going to enter. Most people want to do dieting and working out but few practices it in real life like this, in trading traders hear about money management and most traders want to apply it in their trading, but few accept it in real trading. Traders can control their risks by placing stop loss orders. Be careful while using stoploss on any trade. Take a maximum risk of 1% of total equity. By only this, you can become different from any individual trade. Basically, rather than search for other alternative having safeguards in place will shield your account and you can remain in business.
More important is keep up a discipline to follow your plan once you have made it and keep updating it. First trade with risk capital, trading with fund known as risk capital is good for traders. The expendable money is the money which is not needed for the basic living requirements but specially designed for trading. Then limit your loses, and let the profit run the basic idea for this is use stop loss in a disciplined way. This is the part of risk management. Next is avoiding using too much leverage. If you keep the size of any potential losses resolutely in mind then only use the leverage. In this way, you can protect your portfolio it will not suffer severe. Most of the FOREX traders at one time or another time makes unplanned draw downs if they find themselves on the wrong side of the market. Then avoid too much heat means always be calm and patient when you trade. Avoid fear and greed otherwise it will lead you to do so many mistakes in trading. You can be far more likely to be profitable in the long run by incorporating the wisdom contained in the money management strategy.
You can become profitable with a better money management strategy and the best supporting software. Read the following to know how?
- Three things you should know about how to make money by online trading and investing
- How Alertel Automatic Buy Sell Signal Software and Technical analysis system can make you consistent profits via trading MCX NSE and FOREX
- Trading tricks from Alertel V series Technical Analysis software with auto buy sell signals gives more than 90% accuracy in Commodity, Currency and Share Markets
- How to trade stocks and commodities with Alertel automatic buy sell signal software