Shulou(Shulou.com)06/02 Report--

Fund management is a defensive strategy and a key factor in the success of transactions. A defensive strategy is necessary because foreign exchange speculation uses a high leverage ratio, and the higher the leverage ratio, the greater the likelihood of profit and loss. Many people fall in love with the foreign exchange market at first sight, mostly because the foreign exchange market uses leverage to make huge profits with limited speculative principal. The use of leverage also means that traders can quickly lose all their money without the guidance of money management strategies. There are two basic control methods for effective fund management strategy-capital preservation and discipline.

Capital preservation-keeping leverage low

The first rule is to try your best to stay in the trading game for a longer time. This means that you have to use a strategy to limit losses. The most effective way is to keep leverage low and set a risk-return rate for each transaction.

Discipline-risk rate of return

The risk of each transaction generally depends on the rate of return on risk. This ratio generally does not exceed 3% of the principal, with a profit target of 3:1. In other words, if the stop is set at 20:00, the stop should be set at about 60. In this way, you can ensure that you only need to win one out of every three transactions to maintain a long-term profit. The rate of return on risk is not immutable, and you can adjust it at any time according to your risk tolerance, the market environment at that time and the point of entry and exit. Never put all your eggs in one basket. In any transaction, you have to use a small portion of the account balance to trade, which is the key to standing in the game.

Stop loss

The next rule is to set a stop before trading. This stop must be adjusted in time according to the size of the account and the extent of market volatility. In easy-forex? When trading on the platform, the stop point is guaranteed. Floating losses are an inevitable phenomenon in transactions. The greater the floating loss, the harder it is to gain a foothold in the market, and the less principal can be used to seize future trading opportunities. Taking advantage of risk-return and stop-loss points will help limit losses to a certain range and greatly improve profit opportunities.

At this point, placing a stop-loss order has become an important part of fund management. A stop-loss order is an order that helps to limit trading losses and profits to a certain range. Stop-loss orders are based on tools such as calculating the amount of risk planned for the transaction, break-even point, stop-win point, or technical analysis. Never let a small loss turn into a huge loss.

Stop loss in time and make a profit by letting go

The last rule is: stop loss in time and make a profit by letting go. Easier said than done. It is difficult for ordinary traders to accept losses, and after a series of losses, it is usually psychologically difficult for foreign exchange investors to wait for expansion when they make a profit. Human nature always wins early, just as there is a classic English proverb: a bird in the hand is worth two in the bush. In fact, we use money management strategies to avoid emotional factors in decision-making and to maintain discipline. However, please note that capital preservation is more important than profit.

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