Money Management Vs. Risk Management - Page 231
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Thread: Money Management Vs. Risk Management

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    Registered user Ruhul Amin's Avatar
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    Red face Money Management Vs. Risk Management

    A good trader always follow money management you see. But one another thing is very important is risk management. Also some new trader do not understand the different between money management and risk management. So today, I will give some theory on this topic.

    Definition:
    Money Management Refer to you manage your money. How you spent, How many time, How long etc. Actually the divided of your time and profit is money management.

    On the other hand, we use risk management to divided our capital in some parts of amount. It also refer with %. Also we refer it, How much we want to gain against we take the risk.

    Main Idea:
    The main idea of Money Management is really very large. Actually It include all the thing of forex success. But Risk management is just a part on Money management.

    So we can say,
    Money Management = Risk Management + Timeframe + gain pips (price movement) + loss management.

    On the risk management theme, we can see, we take risk some % on our capital. Money management keep the risk on that % we make part from the amount of risk.

    Example:
    The proper method to describe money management and risk management is, how we control our money. Let’s see, we invest 1000$ in standard account. We take the 2% risk for one trade. That means we take 20$ risk for per trade. Now think about it, How much you want to gain against 20$. I think 30$ is good in ratio of 1:1.5 (Risk Return Ratio).

    I think now you clear about it because both are not same. Risk management comes before money management but it’s a part of money management also.

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  2. #2301
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    What we should be looking to plan here is the best management that will help see we build a great system. Money management is important and this is the best way traders can manage risk to seek for capital growth. With stable management, the possibility to win big is always there and we can as well find it easier to integrate on having a good winning trade. Good money and risk management is important and its the best we must look up to for proper protection of capital.

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    Quote Originally Posted by Tonycee View Post
    What we should be looking to plan here is the best management that will help see we build a great system. Money management is important and this is the best way traders can manage risk to seek for capital growth. With stable management, the possibility to win big is always there and we can as well find it easier to integrate on having a good winning trade. Good money and risk management is important and its the best we must look up to for proper protection of capital.
    Everyone knows Forex is risky and here it is possible to lose our entire investment but still many lack discipline to follow risk management. This lack of discipline is one of the leading cause of majority of newbies and even experienced traders losing a lot in the Forex market. Discipline is needed to manage risks since we need to restrain our thirst for big profits and also our repulsive nature on facing a loss.

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  4. #2303
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    Quote Originally Posted by AmitChallenger View Post
    Everyone knows Forex is risky and here it is possible to lose our entire investment but still many lack discipline to follow risk management. This lack of discipline is one of the leading cause of majority of newbies and even experienced traders losing a lot in the Forex market. Discipline is needed to manage risks since we need to restrain our thirst for big profits and also our repulsive nature on facing a loss.
    everyone know no doubt but a huge number of people do not know reality, they think here we can make just money we cannot lose we can have big experience so this type of wrong thinking just can ruin them i believe we can get success if we have proper management,if we have proper learning scheme and proper analysis, so learn trade as much as you can not never trade without planning

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  5. #2304
    Registered user ola4real's Avatar
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    Quote Originally Posted by naeem555 View Post
    everyone know no doubt but a huge number of people do not know reality, they think here we can make just money we cannot lose we can have big experience so this type of wrong thinking just can ruin them i believe we can get success if we have proper management,if we have proper learning scheme and proper analysis, so learn trade as much as you can not never trade without planning
    It is not what we think at times, but what we do. If you asked all forex traders, they will tell you that the proper planning on your money and risk managements are good for you, but in their real trading activities, they do not trade it. That is why i think that it is wrong for forex traders to be trading forex field without the use of money and risk management, the trader will be losing so much due to that.

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  6. #2305
    Registered user cutiekc's Avatar
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    Money management is important, there is no deny about that, risk management as well, so therefore we shouldn't be the kind of trader who thinks that we should make use of one and then forget about the use of the other one. Furthermore, we ought to know how to apply money management and then we also learn how to apply risk management, they two of them are important.

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  7. #2306
    Registered user Toyen's Avatar
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    Quote Originally Posted by naeem555 View Post
    everyone know no doubt but a huge number of people do not know reality, they think here we can make just money we cannot lose we can have big experience so this type of wrong thinking just can ruin them i believe we can get success if we have proper management,if we have proper learning scheme and proper analysis, so learn trade as much as you can not never trade without planning
    I believe that every trader has to try so hard to always be doing what is right in the market, doing what is right will go a long way in fixing the situations confronting different traders. I believe strongly that the best results in the market is happening as a result of the best management which traders are using with their strategy. No matter how much you learned, when you do not use the management and strategy well, nothing will be done.

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    Registered user Sixteen's Avatar
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    We have to always follow the process to manage risk and see that money management is important to follow up in this trade. Good traders here knows for sure that the right risk management is what should be followed and its what will give us the chance to really earn good. If our investment will be managed, it will enable us to succeed and it will give us the real chance to earn. Good money management is necessary and we can always understand this and build something which we need with manage our capital.

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  9. #2308
    Registered user Sascha's Avatar
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    both managements are important and can't be used independently. as a good trader with experience, we must choose the best things to complete our trading system to help us make money while reducing our risk of loss. none of us want to lose in market, but risk is always here to haunt us. whatever we do, we'll still losing sometimes. it's the job of these managements to help us limiting our loss while increasing our profits to the desired amount we want.

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    Registered user cutiekc's Avatar
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    From the things I have learned as a trader, there is no need comparing the two of them, we ought to see them as being so much important to the way we are trading, once we see that and then we get to make good use of it when trading, then the better for us. Trading with the use of the money and risk management suggest that the trader values his money.

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  11. #2310
    Registered user Senorita's Avatar
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    If we have to get better, we must understand that good money management will help give us the chance to make good profits in the right time. The chance of earning with the right management is very helpful and hence this is done we can see that our capital is well protected and managed. Good risk management is important and its likely something that we need to work on in order to develop something that we can earn from.

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