What is capital preservation, capital management is, cash management, capital management education, investment management effectiveness, rational capital management in forex trading with forex
The most important thing is the preservation of capital investment. The capital preservation is deciding how many portfolios you are willing to accept and how much risk that the transaction's risk tolerance can assure you. The success of the preservation of capital may differ between a successful account that you can control the future and a successful account that you consume in six months.
If you've ever watched on television contest pocker, you will see how to preserve the capital of the players. Rarely you see the players put all of their chips on a board. In most cases, it would be "stupid" to do so. If players split the money and take risks in each hand, they know that they can win or lose and they were prepared to continue playing after the game. Conversely, if the player accepts all risks and put into a card game, the only one the only way they can continue playing that they have the right of decision. There will be a lot of pressure and you have to get good cards to hope for a miracle to happen.
The successful investors who establish clear rules when they participate in the transaction. The above rules will help them avoid the pitfalls to preserve capital and to control their emotions. Here are three rules to preserve capital that you can apply in your trading.
Sufficient capital to continue trading on other days. Have sufficient capital to continue trading on other days is the biggest advice for the initial investment. Not interested in your investing strategy is right or wrong, if you can preserve capital to continue trading on another day, you still have a chance to earn extra money. These rules will help you know what to do to survive in the forex market, but you have to understand and believe in the rule, then you have an advantage over other investors.
One factor that investors often go too far and burn that account is greed. As investors become more greedy they will accept unnecessary risks. They will spend a lot of time trying to figure out a technical indicator or an economic statement that they are "holy grail" of the investment. They believe that if they just follow what the economic indicators say or what the economic statement points out, they will never have to worry about the loss of their investment. You also hear this as the "secret" of the investment.
Unfortunately, irritated both research and non-profit hopes on simply because there is no "secret" here at all. They can get a technical indicators profitable in a certain stage of the market in the past, but when the market changes, a new technical indicators prevailed. Or when they find out a statement that makes economic markets react in the months ahead and believe that they have found the key to success. But again, the market will change and they will have to find a different key for success. To help you avoid such ambitions, the following rules will help you how to preserve capital for the transaction on the other.
Know exactly what you can afford to take risks Know exactly what you will take risks before you start trading. These are basic rules to preserve capital for the next day. If you do not exceed acceptable risk to your account on the trading day today, you know that you will have enough capital for the next trading day even when you are at a loss today. Because you will not know what will happen in the market and you will not want to risk putting all in one transaction.
The first thing you need to do is decide how much you are willing holes percent on your account for a transaction. Once you've determined the rest is just simple math. Most investors accept risk relaxed about 2% of the total capital in their account for a transaction. There is a general rule that you need to decide if you want to preserve or increase your account like. If you want to increase your account more than they would accept a higher percentage of risk on your account for each transaction. If you want to preserve your account, then you will accept per cent lower risk on your account for each transaction. It's all up to you to decide whether to accept the level of risk you how much. But one thing you should remember is to avoid going too far. If you want to increase your account should accept risk at about 2-5% per transaction. If you want to preserve the account should accept risk at about 1-2% for each sale dich.Neu you risk too much, you may not have enough capital to trade for the following day. If your risk tolerance is too low, you will not be able to earn enough money from their investments.
Knowing the scale of investment decision. Knowing the scale of investment decisions will help you to avoid the risk of overinvestment a risk. The scale of investment is the amount you spent in each transaction. Once you know the level of risk that you are willing to accept, you should know how to calculate the transaction so that you do not have to accept more risk than you can accept.
To determine the scale of investment, you must first decide your stop loss level is where. Once you've determined stop loss, you have to find out how many pips between points you enter your transactions and point out the transaction. Then you enter that number into the following simple formula to determine the size you need for each investment transaction
Risk Volume / (PIP at risk per pip value x) = scale investment Know the exact size of the investment will help you eliminate the fear. Investors are uncertain about their investment scale will worry about them may be more losses than they can accept. If you can eliminate fear, you will have better investment decisions.
Stop loss Stop loss order is an order to help you out of trading if the currency pair reaches a specific price point. Stop loss orders allow you to protect your account if you do not have time to monitor the market 24/24 due to human nature does not allow you to do it.
If you buy a currency pair, you would place a stop loss order below the current market price to protect you in case the currency pair is bearish reversal. If you sell a currency pair, you would place a stop loss order above the current price to protect you in case the currency pair is bullish reversal.
For example: You buy EUR / USD at 1400 prices and have a strong support level around 50 pips below the current price at 1.3950 and you decide that if the currency pair drops below this level will continue to decline so you decide not to keep the price down state deeper 1.3950. To protect your account, place a stop loss order at 1.3940 price, help you out of trading when price hits 1.3940. Whenever a day if prices fell 1.3940, the transaction will close automatically.
Stop loss orders are safe transaction and it plays an important role in all decisions to preserve your capital. Never trade without stop loss orders.
