Management of funds and risks proposed by Angelo Forex

Before you start trading, it is important to understand that managing funds and risks is the most important point for traders. The first cause that many traders will lose funds is that insufficient consciousness of funds and risk management strategies has occurred.

As a general rule, it is important that one position does not rick the fund more than 5 percent. I think that it is possible to expand the risk range by experienced traders and up to 10%, but it is better to avoid exceeding 10 percent. In the table below, the amount of funds and the loss cut level (10 Pips / 15 Pips) indicate the appropriate number of transactions. Risk management within the green, yellow area is recommended. Avoiding the road in the red area is safe.



          Low risk (1-5% of funds)
    Medium risk (6-10% of funds)
    High risk (over 10% of funds)

 

Turn off with
10-Pips

 

Lot number \ Cash amount $100 $200 $500 $750 $1,000
0.01 Lot LOW LOW LOW LOW LOW
0.05 Lot LOW LOW LOW LOW LOW
0.1 Lot MEDIUM LOW LOW LOW LOW
0.2 Lot HIGH MEDIUM LOW LOW LOW
0.5 Lot HIGH HIGH MEDIUM LOW LOW
1 Lot HIGH HIGH HIGH HIGH LOW


Turn off with
15-Pips

 

Lot number \ Cash amount $100 $200 $500 $750 $1,000
0.01 Lot LOW LOW LOW LOW LOW
0.05 Lot MEDIUM LOW LOW LOW LOW
0.1 Lot HIGH MEDIUM LOW LOW LOW
0.2 Lot HIGH HIGH LOW LOW LOW
0.5 Lot HIGH HIGH HIGH MEDIUM LOW
1 Lot HIGH HIGH HIGH HIGH HIGH


Gold is a trading stock with a higher risk than FX because of its extremely high volatility. There is a possibility of greater profit (or loss) in relation to the high margin requirement. The table below shows examples of risk strategies for gold trading.



Turn off with
200-Pips

 

Lot number \ Cash amount $100 $200 $500 $750 $1,000
1 Lot LOW LOW LOW LOW LOW
5 Lot MEDIUM LOW LOW LOW LOW
10 Lot HIGH MEDIUM LOW LOW LOW
20 Lot HIGH HIGH MEDIUM LOW LOW
50 Lot HIGH HIGH HIGH HIGH MEDIUM
100 Lot HIGH HIGH HIGH HIGH HIGH



Risk Reward Ratio

There is also a "risk (loss) reward (profit) ratio" as an indispensable item in fund management. Once you have identified acceptable losses for one transaction, we will set a proper level of earnings for risk.

For example, if you take the risk of 10 Pips in a 0.1 lot transaction, the allowable loss is $ 10 (10 x $ 1). As the risk reward ratio accompanying this, the following are conceivable.

The higher the risk reward ratio, the fewer the number of profit transactions required to make the total transaction result positive.

The higher the risk reward ratio, the more you have to earn a lot of Pips before settlement, so it will be difficult to win with a total trade.

The choice of Risk Reward Ratio depends on the trade style. Scalping generally tends to have a low ratio, and day trading tends to prefer a high ratio.


I definitely want to keep it in FX trading! Seven rules

1. Make a lost order on a trading position without fail Trade without doing a lost order. This is the most common and most expensive failure factor for trading beginners. Let's recognize your own loss tolerance and be sure to do a loss cut order. If you trade without setting a loss-free order, you can lose all the funds in a short period of time.


2. Always make an order for trading positions. Trading without making a usual meal order has the same risk as trading without making a loss order I will come along. If you do a trading without making an order for profit and try to judge an appropriate profit margin by feeling, the position immediately turns into a loss transaction when the market moves backwards.


3. The range of loss order is not too wide, not too narrow depending on transaction style and frequency, but the loss level needs to be adjusted according to market price fluctuation there is. In general, in index transactions, we will keep spreading level to be wider so that we can fully absorb market volatility and spread spread. If you place a loss cut order at 10 Pips in the index transaction, it is almost 100% loss transaction. Under normal market conditions, short-term trading is narrow, and medium- and long-term trades are set widely for damage levels.


4. Do not risk most of funds in a single transaction Bargain most of the money on a single deal. This is also a common failure factor for beginners. Generally, up to 5% of initial capital is considered reasonable for loss tolerance in one transaction. In this case, as long as you do not lose about 20 times, you will not lose all the funds.


5. Keep in mind the appropriate risk reward ratio Choose the appropriate risk reward ratio according to your transaction style. However, it should not be 1: 1 or less. Ratio 1: 1 means that the loss cut and the width of consumption are equal (eg loss cut order 20 pips favorite food order 20 pips). In this case, in order to maintain zero profit and loss, you need to win with one transaction in two times. Ratio 1: 2 is a state in which the profit-taking level is twice as wide as the loss level (eg loss cut order 20 pips favorable food order 40 pips). In ratio 1: 2, if you can win with three transactions at a time, you can maintain zero profit and loss.


6. Limit the type of transaction currency pair Let's limit the type of currency pair you want to trade. Focusing on the trends of 2-3 kinds of currency pairs and analyzing the history chart makes it possible to gain a deep understanding of the characteristics of these currency pairs and become sensitive to the signs of fluctuations.


7. In order to be a trader who can trade with logic and analysis and not being concerned with emotions and intuition , it is natural, but it is necessary to improve the probability of winning over the probability of losing Yes. It seems that you trade without taking basic technical analysis and trading system, it is not much different from gambling. There are many ways to increase the probability of winning. You can learn about the basic technical analytics tools on the trading platform and grasp the signal of buying and selling, which will improve your trading experience and profit margin.