Money Management Vs. Risk Management - Page 226
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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. #2251
    Rookie juniorpeters's Avatar
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    you will know a good trader when he trades with risk management and money management,most traders don't use this to trade the market probably because they have small trading account.i don't use to make use of it when i had a small trading account,it was when i started having big amount of money in my account that i used risk management and money management.

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  3. #2252
    Rookie Toyen's Avatar
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    Quote Originally Posted by juniorpeters View Post
    you will know a good trader when he trades with risk management and money management,most traders don't use this to trade the market probably because they have small trading account.i don't use to make use of it when i had a small trading account,it was when i started having big amount of money in my account that i used risk management and money management.
    Trading with money and risk management is good part of a good trader, the traders which will not trade with them are not going to find it easy. It is never a good thing to underrate the market, the traders that are not trading with the money and risk management are the ones that are underrating the market, and the market will make them to lose. The traders with good management likewise needs to use strong strategy with it.

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  4. #2253
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    What I can say is that for every trader in forex, they must understand the very huge impact or role that good risk management plays in forex. This is very important because as long as a trader would follow the right management in forex, it will enable then to work on this trade and will however give them the chance to see that success is truly made. A good management will always be important and its what will give us better access to always survive and trade a promising opportunity.

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  5. #2254
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    Money and risk management is very important in forex trading. Trader can not lose much per one trade because it will be difficult to recover next day if money are lost today. The best way is if trader has the rule that he can not lose more than 5 percents of account per 1 trade. Money management is used by all successful traders.

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  6. #2255
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    The use of money and risk management is so much important, every one will be needing it, because at the end of the day, the trader that makes use of risk and money management will get to have the most protection over the way they trade and most of all will be able to avoid most of the bad trading results that could possibly come to them.

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  7. #2256
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    Quote Originally Posted by Makaveli View Post
    The use of money and risk management is so much important, every one will be needing it, because at the end of the day, the trader that makes use of risk and money management will get to have the most protection over the way they trade and most of all will be able to avoid most of the bad trading results that could possibly come to them.
    every one is concentrating on money management and risk management so its not good i think for trading we need of good analysis also because when we have good analysis we can understand market and can earn from it, management is not enough for success for understanding market we need to work on analysis. so make sure you work on analysis and you understand market and place exact entry point order

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  8. #2257
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    It is not proper to compare such two important things that we need to make use of in the market all the times, so therefore, we need the two of them to make money from the market. Forex could be complex but when we miss making use of such simple tool and then rely only on our trading strategy and then at the end of the day, when we loss we blame the market.

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  9. #2258
    Rookie ola4real's Avatar
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    Quote Originally Posted by Darkhorse View Post
    It is not proper to compare such twimportant o things that we need to make use of in the market all the times, so therefore, we need the two of them to make money from the market. Forex could be complex but when we miss making use of such simple tool and then rely only on our trading strategy and then at the end of the day, when we loss we blame the market.
    Yes, the money and risk management are both good for forex traders, the forex traders who are using the two will get to know how to trade without losing much. That is why learning of traders is important, a simple tools like these are the reasons why forex traders are losing, and when that traders did not learn further, they will not know this vital elements of trading, this will deprive traders the surviving skills of trading.

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  10. #2259
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    Quote Originally Posted by ola4real View Post
    Yes, the money and risk management are both good for forex traders, the forex traders who are using the two will get to know how to trade without losing much.
    if we limit our loss if we use stop loss then we can avoid much losing but if we are not doing this and not accepting some loss we are not closing order into some loss then we can lose or all in some time. so this is totally depend on trader if he avoid this big risk here he can do better trade otherwise he can make mistakes and these mistakes can give more loss, so management is safety for a trader in sure

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  11. #2260
    Rookie ola4real's Avatar
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    Quote Originally Posted by touqir View Post
    if we limit our loss if we use stop loss then we can avoid much losing but if we are not doing this and not accepting some loss we are not closing order into some loss then we can lose or all in some time. so this is totally depend on trader if he avoid this big risk here he can do better trade otherwise he can make mistakes and these mistakes can give more loss, so management is safety for a trader in sure
    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.

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