3 Practical Money Management Tips for Traders

0 42

Are you tempted to trade more money than you have? You may have this temptation because you are on a winning streak. Whether you are a beginner to trading or a seasoned trader, the money management skills play a significant role in the success of your trading strategies.

Money management is an essential part of trading but most of the traders ignore it. You may have seen most of the traders like to spend your valuable time on improving their strategies to make more profits order to trade wisely. However, a little importance is givento the money management aspect.

Set realistic goals

When you set unrealistic goals for yourself, this serves as an obstacle. Although, there are traders who manage to get high returns, it may be because they are more experienced or may be trading with a high equity.

We can understand it with an example, a 10% return on $ 1000 may not be a large amount for you, but you when you compare the same 10% return on an amount of $ 10,000, then you will find it a good return. This is the reason greed overpowers our trading decisions and we need to control it as a trader as suggested at NEoWave.com. When you have a realistic goal, you can equip yourself in a proper manner emotionally and logically sticking to the trading rules.

Keep an eye on your risk reward ratio

This can be defined as if you take a risk of investing $ 200 on a trade; ideally, you are supposed to get $ 400 as profit. This rule applies in money management as well as trading strategy. This ratio considered good for every winning trade to recover your losses and make profit. This is also known as 1: 2 ratios and offers 50% win rate.

Trade with the money you can afford to lose

You may find it this advice related to a casino game. However, this is a sound advice and it does not matter you are playing to win a casino game or to make profit in trading.

When you trade, you do not think that you may lose this money, but on the contrary, every successful trader has lost. Moreover, you may be the next one to lose your hard-earned money; this also helps in understanding the Elliott Wave trading.

Do you know any successful trader who has never lost his money? Similarly, when you are trading you are supposed to be ready to lose money, but by implementing the right the strategies of Elliott Wave, you can minimize the chances of losing. You cannot rule out the possibility of losing your money,so you need to trade with that money which you can afford to lose. As you do not know, what the future holds for you.

  • Make it a point never to trade with borrowed money.
  • Never trade with your baby’s food money.
  • It is not advised to take costly cash from your credit cards to restore your account balance.

Prepare yourself for losses

We all know that loss is an inevitable part and preparing for the same in advance. Elliott Wave forecasting will make you proficient in trading and surviving even after the heavy losses.

Leave A Reply