Ten Stock Trading Money Management Strategies - Stock Trading Account Management
The process below describes the process of formulating stock trading money management and practical advices on formulating your own stock trading money management system in Stock Trading - stock trading account management.
1. Keep the Necessary reserve (over and above the stock trading broker margin requirement)
This reserve is needed for unusual situations and it should be not less than 50% of invested equity. It is the first rule of stock trading account management in margin definition for opening stock trading orders. However, many experts and analysts advice more reserve of about 70%-90% of invested stock trading account capital for safe operation in stock trading.
2. Do not to invest more than 2%-6% - Stock Trading Account Management Rules
This is one of the principle that helps to avoid bankruptcy: never invest more that 2% on one market and do not to invest more than 6% in the total open stock trading trades.
3. Never risk a loss of more than 2% of invested money on any single trade - Stock Trading Account Management Rules
This is not the same as above, the above is never invest more than 5% , this is never to lose more than 2% on a single trade. In this case a stock trader risks only lose small part of his equity with an unprofitable order.
The use optimal investment of your funds is that you should diversify to some degree. Just In case one trade losses, the order can be covered by profits of another trade.
5. stock trading money management rules should be well written down - Stock Trading Account Management Rules
On a piece of paper or better still in your trading plan. If you open orders on this orders should be within your stock trading money management guidelines.
6. Define your stop loss and take profit levels - Stock Trading Account Management Rules
When you are trading put your stop stock trading orders in order to avoid any huge losses or even bankruptcy. Profit taking levels will ensure you get additional profit by taking money out of the stock trading market. analyze the situation and predict the future movement of stock price action and place orders accordingly. You can even use indicators and volatility of the stock trading instrument to know where to place these orders.
7. Define of possible loss or profit before executing a trade - Stock Trading Account Management Rules
Consider only opening stock trading trades when you have the chance to get profit against loss ratio of 3:1. If you cannot do it then don't open the order.
stock trading money management should seek to bring maximum profit to the stock traders account, keeping profitable orders as long as possible is a good strategy. Therefore, if you make some profitable orders you can have goods results.
8. Try to follow the rules of opening and closing the stock trading orders specified in your plan.
That way you will get consistent trading results required for making profits in the stock trading market.
9. Do not revenge against the Stock trading market
In this case, you will not be analyzing the situation but you will just be trading based on emotions and you will lose more money.
10. Timely rest
Do not trade when you are exhausted, no matter how tempting the situation may seem, you might not get the profits that you can if you were to trade based on your stock trading schedule.
Considering these - Stock Trading Account Management Rules and Guidelines can make you trade profitably. try to develop your own stock trading money management strategy that gives you good profits.