Money Management Vs. Risk Management - Page 6
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Thread: Money Management Vs. Risk Management

  1. #1
    Trader 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. #51
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    Quote Originally Posted by samprazaan View Post
    [lang=id]yes, there are many advantages that we can take from forex trading and even as my view that forex trading is the most flexible business where everyone can join with only spend a little of money and even with bonus only and then get the same chances like the others who use their own money, this is a good chance and we only need to take it seriously, and just think positively will help us to think about it with well[/lang]
    Money management is the most critical aspect in the forex trading business with the help of which the traders can either scale up their money or lose all at once. Thus, one should always ensure that they incorporate risk and money management in their each and every trade for successful trading career.

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  3. #52
    Trader techboy's Avatar
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    Quote Originally Posted by Ashviniurs View Post
    Money management is the most critical aspect in the forex trading business with the help of which the traders can either scale up their money or lose all at once. Thus, one should always ensure that they incorporate risk and money management in their each and every trade for successful trading career.
    I agree that money management is important but it is just as important with good trading strategy and trading psychology, no trader will survive in the long run just by using good money management, it should be used in coordination with good strategy and good psychology.

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    " Trading is 70% Psychology, 15% Risk Management and 15% Strategy ! "

  4. #53
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    money management is the most important type of the experences which we are ina very need to know it very well . by using the money mangement we may be able to use the suitable amount of the lot size with the good leverage . and also it is a must to combine with it the risk mangement to be safe most of the times .

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  5. #54
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    Quote Originally Posted by techboy View Post
    I agree that money management is important but it is just as important with good trading strategy and trading psychology, no trader will survive in the long run just by using good money management, it should be used in coordination with good strategy and good psychology.
    Sir, you are driving a good point in this regard, the money management is as good as the strategy of the trader and the psychology of the trading in the trading. All of these are very crucial to make success in the market, and no traders could do without nay of them all. I think that traders should work all together, not only the management the trader is using, the strategy should be good, while the psychology should be superb as well.

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  6. #55
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    Quote Originally Posted by cozard007 View Post
    Sir, you are driving a good point in this regard, the money management is as good as the strategy of the trader and the psychology of the trading in the trading. All of these are very crucial to make success in the market, and no traders could do without nay of them all. I think that traders should work all together, not only the management the trader is using, the strategy should be good, while the psychology should be superb as well.
    Risk management is essential for survival in trading as we all know. We should practice risk management in demo account first. So practice is must in every work. Trader can be self confident through everyday practice. Trader can be more strength through correcting and improving his trading. Trader can reach in his/her target through proper trading habits.

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  7. #56
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    Quote Originally Posted by hosny55 View Post
    money management is the most important type of the experences which we are ina very need to know it very well . by using the money mangement we may be able to use the suitable amount of the lot size with the good leverage . and also it is a must to combine with it the risk mangement to be safe most of the times .
    [lang=id]both of money management and risk management are very important for traders who want to trade properly where the system will work well, both of them will help the traders to think realistic during in the market, and help them to control the emotion too
    but the key here is about discipline, they need to support it with strong discipline[/lang]

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  8. #57
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    Quote Originally Posted by AmitChallenger View Post
    Risk management is essential for survival in trading as we all know. We should practice risk management in demo account first. So practice is must in every work. Trader can be self confident through everyday practice. Trader can be more strength through correcting and improving his trading. Trader can reach in his/her target through proper trading habits.
    Well, it is the demo trading that would help the trader to start this risk management plans and practices in the market. It is not the duty of the trader to be very serious about it, it is good to understand it very well, and make sure you do not play it based on the emotion you have at any point in time. The best use of management is to follow its plans and its rules.

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  9. #58
    Trader techboy's Avatar
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    Quote Originally Posted by samprazaan View Post
    [lang=id]both of money management and risk management are very important for traders who want to trade properly where the system will work well, both of them will help the traders to think realistic during in the market, and help them to control the emotion too
    but the key here is about discipline, they need to support it with strong discipline[/lang]
    Proper money management in trading is a must, but sometime trader becomes indiscipline about money management when he experience successive losing trades, we become too eager to recover our loss and ignore risk management which can most of the time put us in a bad situation, being discipline in everything we do in trading is must but it will take a strong will to do it.

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    " Trading is 70% Psychology, 15% Risk Management and 15% Strategy ! "

  10. #59
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    Quote Originally Posted by techboy View Post
    Proper money management in trading is a must, but sometime trader becomes indiscipline about money management when he experience successive losing trades, we become too eager to recover our loss and ignore risk management which can most of the time put us in a bad situation, being discipline in everything we do in trading is must but it will take a strong will to do it.
    It is true that traders becomes indiscipline in management, and the man thing is because of the emotion that holds them down in the market at a particular point in time. It is very good to understand the market very well with management, if not, it would affect you more than what you planned for. It is good to have full strength of management, it is the best for trading.

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  11. #60
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    Quote Originally Posted by cozard007 View Post
    Sir, you are driving a good point in this regard, the money management is as good as the strategy of the trader and the psychology of the trading in the trading. All of these are very crucial to make success in the market, and no traders could do without nay of them all. I think that traders should work all together, not only the management the trader is using, the strategy should be good, while the psychology should be superb as well.
    Money management is very effective like our trading strategy and trading psychology, that's looking good to hear that we are talking about a good combinations of some of important term's that we have use in our trading. Its very essential to focus on work all together. As we know that a person can't do proper work from his one single hand so he need both hands for a good support and for fulfill a work.

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