Best Gold Risk Management System
XAUUSD Account Management Gold Risk Management Tutorial
In any business, in order to make a gold profit one must learn how to manage risks. To make gold profits in trading gold you need to learn about the various gold risk management strategies discussed on this best learn trading gold tutorial web site.
When it comes to gold online trading, the risks to be managed are potential gold losses. Using gold risk management rules will not only protect your gold trading account but also make you profitable in long run.
What's DrawDown in XAUUSD Trading?
As gold traders the number one risk in trading xauusd trading is known as draw down - this is the amount of money you have lost in your trading xauusd trading account on a single xauusd trade transaction.
If you have $10,000 gold account balance & you make a gold loss in a single gold trade of $500, then your trading gold draw-down is $500 divided by $10,000 which is 5% trading xauusd trading draw down.
What is Maximum Gold Trading Draw Down?
This is the total amount of money you have lost in your trading xauusd trading account before you begin making profitable xauusd trades. For examples if you have $10,000 gold trading account balance & make 5 consecutive losing trading gold trades with a total of $1,500 gold loss before making 10 winning xauusd trades with a total of $4,000 gold profit. Then the trading gold drawdown is $1,500 divided by $10,000, which is 15% maximum xauusd trading draw down.
Gold Draw Down is $442.82 (4.40%)
Maximum Gold Draw Down is $1,499.39 (13.56 %)
To learn how to generate the above trading gold reports using MT4 gold platform: Generate Gold Trading Reports in MetaTrader 4 Guide - Best XAUUSD Risk Management System - Learn XAUUSD Management Tutorial and XAUUSD Management Strategy - Gold Risk Management Books
XAUUSD Account Management Gold Risk Management Tutorial
The trading gold examples illustrated and described below shows the difference between risking a small percent of your gold account balance compared to risking a higher percentage. Good Gold Account Management Gold Risk Management PDF principles requires you as a trader not to risk more than 2% of your total gold account equity on any one single xauusd trade transaction.
Gold Percentage Risk Method
2% & 10% Gold Risk Management Rule
There's a big difference between risking 2% of your gold trading account equity compared to risking 10% of your equity on a single xauusd trade transaction.
If you happened to go through a losing gold streak & lost only 20 xauusd trades in a row, you would have gone from beginning gold account balance of $50,000 to having only $6,750 left in your xauusd account if you risked 10% on each gold trade. You would have lost over 87.5% of your gold trading account equity.
However, if you risked only 2% you would have still had $34,055 in your gold trading account which is only a 32 % gold loss of your total gold trading account equity. This is why it's best to use the 2% gold risk management strategy in trading gold.
The difference between risking 2 % and 10 % on a single gold trade is that if you risked 2 % you would still have $34,055 in your gold trading account after 20 losing trades.
However, if you risked 10% you would only have $32,805 in your gold trading account after only 5 losing gold trades that's less than what you would have in your xauusd account if you risked only 2% of your xauusd account and lost all 20 trading gold transactions.
The point is that you want to set up your Gold Account Management Gold Risk Management PDF rules so that when you do have a gold loss making period, you will still have enough gold account balance to trade next time.
If you lost 87.5% of your gold account balance you would have to make 640% gold profit to get back to breakeven.
As compared to if you lost 32 % of your gold trading account balance you would have to make 47 % gold profit to get back to the break-even. To compare it with the gold example 47 % is much easier to break-even than 640% is.
The trading chart below shows what percentage you would have to make in order to get back to break even if you were to lose a certain percentage of your gold trading account balance.
Concept of Break Even - Best XAUUSD Risk Management System - Learn XAUUSD Management Tutorial and XAUUSD Management Strategy
XAUUSD Account Equity and Break Even - Best Gold Risk Management Strategy - Best XAUUSD Risk Management System - Learn XAUUSD Management Tutorial and XAUUSD Management Strategy
At 50% trading xauusd drawdown, one would have to earn 100 % on their invested gold account balance - a feat accomplished by less than 5% of all gold traders worldwide - just to breakeven on a gold account with a 50% gold loss.
At 80% trading gold drawdown, one must quadruple their trading gold equity just to bring it back to its original equity. This is what's known as to "break-even" - which means - get back to your original gold trading account balance that you started with.
The more money you lose, the harder it is to make it back to your original gold trading account size.
This is why as a trader you should do everything you can to PROTECT your gold trading account equity. Do not accept to lose more than 2% of your gold account equity on any 1 single xauusd trade transaction.
Gold Money management is about only risking a small percentage of your gold account balance in each trade so that you can survive your losing streaks and avoid a large draw down on your trading xauusd trading account.
In gold trading, traders use stop loss orders that are put in order to minimize gold losses. Controlling risks in trading gold involves putting a trading stoploss order after placing an new trading xauusd trade order.
Effective XAUUSD Risk Management
Effective trading gold risk management requires controlling all risks in trading gold and a trader should create a risk management trading gold system and a risk management trading gold plan. To be in trading gold or any other business you must make decisions involving some risk. All trading gold factors should be analyzed to keep risk to a minimum and use the above gold risk management tips on this learn gold lesson - Best XAUUSD Risk Management System - Learn XAUUSD Management Tutorial and XAUUSD Management Strategy.
Ask yourself? Some Gold Trading Tips
1. Can the gold risks to your trading gold activities be identified, what forms do they take? & are these clearly understood & planned for in your written trading gold plan? All the gold risks should be taken care of in your trading gold plan - written gold plan.
2. Do you grade the trading risks encountered by you when trading gold in a structured way? - Do you have a risk management strategy & a trading gold plan? have you read about this learn trading gold lesson which is well covered & discussed here on this learn trading gold guide tutorial for beginners.
3. Do you know maximum potential risk of each exposure for each trade that you place?
4. Are trading gold decisions made on the basis of reliable & timely gold information & based on a trading gold strategy or not? Have you read about trading gold systems on this learn trading gold course.
5. Are the gold risks big in relation to the trade turnover of your invested gold account balance & what impact could they have on your gold profits margins & your gold trading account margin requirements?
6. Over what trading time periods do the trading gold risks of your trading gold activities exist? - Do you hold trading gold trades longterm or shortterm? what type of gold trader are you?
7. Are the exposures in trading a one off or they are recurring?
8. Do you know about techniques in which your trading gold risks can be reduced or hedged & what it would cost in terms of gold profit if you did not include these measures to reduce potential gold loss, and what impact would it make to any upside of your gold profit?
9. Have your gold risk management rules been adequately addressed, to ensure that you make and keep your trading gold profits.
Best Gold Risk Management Strategy - Best XAUUSD Risk Management System - Learn XAUUSD Management Tutorial and XAUUSD Management Strategy - Gold Risk Management Books
