There are 2 mistakes about money managemant often done by a trader:
1. If the capital is small
Want to immediately make the capital change so big, so the rush in trading. Once lost a little, direct panic and prustasi.It is too heavy to restore the capital as before. Resurrection is already ...
2. If the capital is large
Prestige make small transactions small, feel that with the capital of so much must surely generate big profit. Feeling must generate profit greater than profit of a business equally big of its capital.
When losing, just realize that the money has been spent so much. Stress is next ...
Therefore, let's be wise in regulating the financial / money management of our capital, especially in playing this betonmarkets. Because transactions in betonmarkets go very quickly, keep your capital from getting lost in the blink of an eye.
There is a saying that "only run out of money is what can make a trader stop trading"
Averaging
Here is an explanation of averaging. By using averaging, the losses we experience can be closed in a fast time.
Averaging is reopening a new position with prediction direction according to the old position, although currently the price is moving opposite, with confidence the current price will follow according to our prediction.
Averaging is taken when we are confident that the price will reverse as expected.
This means that when we predict the price will rise, it actually went down, and we still predict the price will rise, that's where we do averaging. So when the price returns to the first buy position, we have a profit. That is from the second position.
Example:
You predict that the price of GBP / USD will rise from 1.2000 to 1.2500 then you open a Buy position.
Not long then the price moves down to 1.1800, as you remain confident the price will rise, you open BUY position again at 1.1800.
After a while the price turns upwards and now is at 1.2000 level.
If you liquidate both positions then: First position = IMPAS and second position = Fortunately 200 points.
Averaging can also be done when we are lucky, for example:
You predict that the price of GBP / USD will rise from 1.2000 to 1.2500 then you open a Buy position.
Not long afterwards it turns out true price moves up, currently at the level of 1.2300. because you remain confident the price will rise to the 1.2500 level, you open BUY position again at 1.2300.
If it turns out the price moves up to 1.2500, then you get double profit from position to one and two. That is 500 points from position to one and 200 points from the second position.
But if it turns out the price even down to 1.2200, then you are still a profit that is equal to 100 points. From position to one profit 200 points and from second position loss 100 point. so the net profit when closing both positions is 100 points.
Switching
Below is an explanation of switching. By using switching we avoid bigger losses, can even be a profit.
Switching is to change direction by closing the losing position, as the price moves against the prediction, proceeds and opens a new position following the current price movement, in the hope that the second position advantage will be greater than the first position already Cut Loss.
For example:
You predict GBP / USD will rise from 1.2000 to 1.3000.
Then you buy GBP / USD at 1.2000 price in the hope that the price will go up.
But it turns out instead of going up, instead instead DOWN to 1.1700!
And after re-analysis, you conclude that the prediction that the price will go up is wrong, and predicted the price will fall to 1.1000.
What to do ?
Instead of fighting the market price and suffering losses and after that price will fall further than now, Decide to close your Buy position now losing (Buy 1.2000, close at 1.1700) and open a new Sell position at 1.1700 (in the hope the price will drop to 1.1000) .
After a while the price continues to fall to 1.1000 so you get 700 points profit (1.1700 - 1.1000). Greater than the loss in the first closed position before, at -300 points (1.1700 - 1.2000).
So when you close your Sell position, your profit on that day is 700 - 300 = 400 points.
TIPS:
- Perform SWITCHING by opening the second position opposite to the first position only when the profit prediction exceeds the loss value of the first position to close.
- If it turns out the price changed in accordance with the first prediction, then you will suffer losses 2 times, namely the first position and second position as well
The next forex learning material is about Averaging strategy
1. If the capital is small
Want to immediately make the capital change so big, so the rush in trading. Once lost a little, direct panic and prustasi.It is too heavy to restore the capital as before. Resurrection is already ...
2. If the capital is large
Prestige make small transactions small, feel that with the capital of so much must surely generate big profit. Feeling must generate profit greater than profit of a business equally big of its capital.
When losing, just realize that the money has been spent so much. Stress is next ...
Therefore, let's be wise in regulating the financial / money management of our capital, especially in playing this betonmarkets. Because transactions in betonmarkets go very quickly, keep your capital from getting lost in the blink of an eye.
There is a saying that "only run out of money is what can make a trader stop trading"
Averaging
Here is an explanation of averaging. By using averaging, the losses we experience can be closed in a fast time.
Averaging is reopening a new position with prediction direction according to the old position, although currently the price is moving opposite, with confidence the current price will follow according to our prediction.
Averaging is taken when we are confident that the price will reverse as expected.
This means that when we predict the price will rise, it actually went down, and we still predict the price will rise, that's where we do averaging. So when the price returns to the first buy position, we have a profit. That is from the second position.
Example:
You predict that the price of GBP / USD will rise from 1.2000 to 1.2500 then you open a Buy position.
Not long then the price moves down to 1.1800, as you remain confident the price will rise, you open BUY position again at 1.1800.
After a while the price turns upwards and now is at 1.2000 level.
If you liquidate both positions then: First position = IMPAS and second position = Fortunately 200 points.
Averaging can also be done when we are lucky, for example:
You predict that the price of GBP / USD will rise from 1.2000 to 1.2500 then you open a Buy position.
Not long afterwards it turns out true price moves up, currently at the level of 1.2300. because you remain confident the price will rise to the 1.2500 level, you open BUY position again at 1.2300.
If it turns out the price moves up to 1.2500, then you get double profit from position to one and two. That is 500 points from position to one and 200 points from the second position.
But if it turns out the price even down to 1.2200, then you are still a profit that is equal to 100 points. From position to one profit 200 points and from second position loss 100 point. so the net profit when closing both positions is 100 points.
Switching
Below is an explanation of switching. By using switching we avoid bigger losses, can even be a profit.
Switching is to change direction by closing the losing position, as the price moves against the prediction, proceeds and opens a new position following the current price movement, in the hope that the second position advantage will be greater than the first position already Cut Loss.
For example:
You predict GBP / USD will rise from 1.2000 to 1.3000.
Then you buy GBP / USD at 1.2000 price in the hope that the price will go up.
But it turns out instead of going up, instead instead DOWN to 1.1700!
And after re-analysis, you conclude that the prediction that the price will go up is wrong, and predicted the price will fall to 1.1000.
What to do ?
Instead of fighting the market price and suffering losses and after that price will fall further than now, Decide to close your Buy position now losing (Buy 1.2000, close at 1.1700) and open a new Sell position at 1.1700 (in the hope the price will drop to 1.1000) .
After a while the price continues to fall to 1.1000 so you get 700 points profit (1.1700 - 1.1000). Greater than the loss in the first closed position before, at -300 points (1.1700 - 1.2000).
So when you close your Sell position, your profit on that day is 700 - 300 = 400 points.
TIPS:
- Perform SWITCHING by opening the second position opposite to the first position only when the profit prediction exceeds the loss value of the first position to close.
- If it turns out the price changed in accordance with the first prediction, then you will suffer losses 2 times, namely the first position and second position as well
The next forex learning material is about Averaging strategy
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