Managed Funds in the FOREX market

Managed Funds in the FOREX market is the ability to correctly calculate the proportion of accounts that can be cast in the commission of a separate trade deal. It is possible to give an even more simple definition: the management of capital - this is a decision on the degree of risk. In reaching this decision, much will depend on what you can expect from the market. Some traders are willing to trade their tactics to maximize profits, while others, conversely, to minimize the losses (I am more inclined to this option), but most traders take positions in between.


The following methods of money management in the FOREX market:


1. Lack of money management - This method automatically uses the majority of traders. He is to enter the market with a contract every time you trade tactic gives the signal to the input. No correction in accordance with other factors such as previous success or defeat, the amount of money in the account, etc., not made. Depending on the size of the account, this technique can be a very risky and very cautious. Usually, newcomers to the Forex is very small accounts, and two or three loss-making deals put them on the brink of ruin. To a large extent, this technique is very good, its main advantage in the simplicity and ability to make a good profit.


2. The method of multiple units - is very similar to the method described above. The difference only that the trader has additional contracts to buy or sell for the same signal trading system. Nice method to obtain high returns on the Forex, but not all traders can accurately calculate the number of units added and eventually lose, often for purely psychological reasons.


3. The method of a fixed amount at risk. Trader must decide - what amount of money you can throw after receiving a signal at the entrance to the market. This method has two disadvantages: the trader must clearly know - what kind of risk we expect from his trading tactics (but it is impossible to foresee all) and this technique does not take into account the size of the trading account. The amount at risk, which was installed in early trade, may not match the new size of the account.


4. The method of fixed percentage of capital at risk. Trader determine what percentage of the value of the account can be a risk if the signal to trade. This method eliminates one disadvantage of previous method - the inability to combine won the money. Combining the profit accounts, fixed percentage method works wonders. When increasing the account will automatically adjust for greater profits, but with a decrease in the account automatically reduces the size of transaction that protects the trader from ruin.


5. The method of harmonization of wins and losses. Often this method is called - by Martingeyla. A very effective method! It is a detailed and careful study. This method of money management with the correct application leads to the fact that your account will grow quickly, without increasing risks. The main advantage of this method is that it allows traders to increase profits in situations with high gains and reduce risk in situations with low gains.


There are two variants of this method. First, if your tactic of trade is the tendency of the profit or loss is followed in succession one after another, after a lucrative deal should increase following the transaction and reduce by half its size after the loss. Second, if your trade tactics to create a balance between profits and losses (and wins any costs, alternate), after the loss-making deals to increase the volume of the following must be reduced by half, and after winning.


Determine what your trading tactics inclined, you can conduct trade statistics, in the MetaTrader 4 all the possibilities there are. It is necessary to undertake careful analysis of trade and no mistake - this is the main drawback of this method, but if not Polenov, then you are waiting for wonderful results.


6. The method of intersection curves of the price. In this method, the trader determines the two moving average (eg, 3rd 8) and composed in the market when the short moving average crosses the longer. And, if the line is the average short line crosses the long middle from top to bottom, it should open a long position, as if on the contrary, the short position. This method requires a serious analysis of the market. It is very similar to the method of trading using a moving average.


Any of these methods can help a trader to improve the profitability of his trading tactics. In practice, you can use several methods of money management and is difficult to predict - which of the methods would be better for this or that tactic? To accurately determine the best method to use statistics and testing. Happy trading.