How to manage your money while trading using automated trading robots?

In order to be on the safe side with any investment plan, application of good money management techniques is essential, especially when you intend on trading on the Forex. Thus, a full-proof trading plan is very important. However, this is easier said than done because there will come a point in trading where you might have to go all-in to maximize your earnings.

Hence, along with a good trading methodology comes the ability to take timely actions and the capability to take and handle risks. Being a risk-taker will increase your confidence in the future trades and will multiply the profits within a short period, as long as the cards are played right.

Minimize risks and maximize profits

In order to minimize risks and maximize profits while trading, two important concepts of money management should be applied. These include:

  1. Investing only a maximum of 10% or less than 10% of your total investment capacity on a single asset

  2. Investing only a maximum of 50% or less than 50% of your total investment capacity at a time

In addition to setting limits on the total amount to be invested per asset per trade, other trading limits can also be predefined in order to control and manage your investments. Some of which are listed below:

  1. Buy Limit – This is the value of the order as mentioned in the trade and it indicates the value at which a particular trade is placed. Buy limit value gives a projection of the future value, that is whether or not the value will increase or decrease.

  2. Buy Stop – This is the value at which trade requests are made in order to buy a specific trade at the quoted price.

  3. Sell Limit – This is a request that is made to sell the trade and the price is usually more than that specified in the trade order.

  4. Sell Stop – Here trade request is placed to dispose the asset at a bid price that is equal to or greater than that mentioned in the trade order.

  5. Buy Stop Limits – This is the limit that is achieved when the future price reaches the values as stated in the trade order.

  6. Sell Stop Limits – This is the limit that used to stop an order placing and is achieved as soon as the bid value matches the order value.

Thus, efficient money management strategies will help you make you better investments and avert or at least minimize trade losses.

Comments are Disabled