Money Management Vs. Risk Management - Page 227
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Thread: Money Management Vs. Risk Management

  1. #1
    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. #2261
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    Quote Originally Posted by ola4real View Post
    The stop loss is the main element who will let forex traders to trade well. Forex traders who are trading well are the traders who knows how to trade with the use of the money and risk management, and are using a solid forex strategy with it. Forex traders who are trading with the stop loss will always use it to accept their losses before it will go wide to the extent that it will ruin all the forex investments of that trader.
    stop loss is really important whenever we do not use sl what happen? we lose all or big so here we have just sl which can save us, which can make us able to earn something good, if we have secure account we can earn but if our account is not secure how we can earn, so relax mind is also necessary here and for this we need to use management we need to use sl because we know with this we cannot lose big or all

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  3. #2262
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    Quote Originally Posted by naeem555 View Post
    stop loss is really important whenever we do not use sl what happen? we lose all or big so here we have just sl which can save us, which can make us able to earn something good, if we have secure account we can earn but if our account is not secure how we can earn, so relax mind is also necessary here and for this we need to use management we need to use sl because we know with this we cannot lose big or all
    i think if we have good analysis if we know where market will go we can trade without sl also. because there are two options we can close manually in some loss of target? or we can make perfect orders with best analysis to avoid loss also. but this is possible if we have good experience if we have good market knowledge and this is possible after demo account practice

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  4. #2263
    Rookie ola4real's Avatar
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    Quote Originally Posted by naeem555 View Post
    stop loss is really important whenever we do not use sl what happen? we lose all or big so here we have just sl which can save us, which can make us able to earn something good, if we have secure account we can earn but if our account is not secure how we can earn, so relax mind is also necessary here and for this we need to use management we need to use sl because we know with this we cannot lose big or all
    Forex traders should know that all the elements of forex trading are important, and the forex traders who are patient with the use of their solid forex strategy and use the money and risk management with it are going to do well in their trading. It us sure that the forex account of that trader will be so secured and the forex trader will have the ability yyo make good income out of what we are doing.

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  5. #2264
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    You have got to manage your risk and become careful. Success depends on the trader who has the both and has always made use of them, You shouldn't be so impatient with the market, but instead, learn to be patient and most of all consistent, that is so much important, use money and risk management at the same time and not trying to compare them, because when you don't use them correctly, they could ruin your trading account.

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