Day Trading Equity Management & XAUUSD Capital Management Trading Strategies

Intra-day Trading Risk Management Strategies

In any business, so that to make profit one must learn how to manage risks. To earn profits in intraday Trading you need to learn about the different gold risk management techniques discussed on this learn day trading lesson web site.

When it comes to day trading, the risks to be managed are potential losses. Using risk management rules won't only protect your trading account but also make you profitable in the long run.

What's Draw-Down in XAUUSD Trading?

As traders the number one risk in day trading is known as draw down - this is the amount of money you've lost in your xauusd account on a single trade transaction.

If you have $10,000 xauusd capital & you make a loss in a single trade of $500, then your draw-down is $500 dollars divided by $10,000 which is 5 percentage% xauusd draw down.

What is Maximum Gold DrawDown?

This is the total sum of money you've lost in your xauusd account before you start making profitable trades. For example, if you have $10,000 in day trading capital & make 5 consecutive losing trade transactions with a total of $1,500 gold loss before making 10 winning trade transactions with a total of $4,000 gold profit. Then the drawdown is $1,500 dollars divided by $10,000, which is 15 percent maximum gold draw down.

Day Trading Equity Management and XAUUSD Money Management Strategies

XAUUSD Draw-Down is $442.82 (4.40%)

Max XAUUSD DrawDown is $1,499.39 (13.56%)

To learn how to generate above in intraday trading reports using MT4 platform: Generate XAUUSD Reports on MetaTrader 4 Course - Draw-Down Money Management Chart - Draw Down Money Management Calculator

Day Trading Equity Management Strategies

The in day trading examples illustrated & described below shows the contrast between risking a small percentage% of your capital compared to risking a higher %. Good Day Trading Funds Management Strategies guide-lines requires you not to risk more than 2 percent of your total equity on any 1 single trade transaction.

XAUUSD Percent Risk Method

Day Trading Funds Management and Gold Equity Management Methods - Draw Down Money Management Chart

2% & 10% Gold Equity Management Rule - Day Trading Risk Management Methods

There's a big contrast between risking 2 percent% of your equity compared to risking 10 percent% of your equity on one trade transaction.

If you happened to go through a losing gold streak & lost only 20 xauusd trade transactions in a row, you'd have gone from a beginning trading equity balance of $50,000 to only having $6,750 dollars left in your trading account if you as a gold trader risked 10 % on every trade transaction. You would have lost over 87.5 percent of your account equity.

However, if you only risked 2 % you would have still had $34,055 dollars in your trading account which's only a 32% loss of your total trading equity. This is why it is best to use 2 % risk management strategy in day trading gold.

The difference between risking 2 % and 10% on one trade is that if you as a trader risked 2 % you would still have $34,055 in your account after 20 losing trades.

However, if you as a xauusd trader risked 10 % you would have only $32,805 in your trading account after only 5 losing trades that's less than what you'd have in your account if you risked only 2% of your trading account & lost all 20 trade transactions.

The point is that you want to set up your Day Trading Equity Management Strategies guide-lines so that when you do have a loss making period, you'll still have enough in day trading funds to open a trade next time.

If you lost 87.5 % of your in intraday trading capital you'd have to make 640% profit to get back to break-even.

As compared to if you lost 32 % of your in intraday trading capital you'd have to make 47% profit to get back to the breakeven. To compare it with 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 in day trading capital.

Concept of Break Even - Draw Down Money Management Chart

Day Trading Risk Management & Gold Funds Management Methods - Draw Down Money Management Chart

Account Equity and Break Even - Day Trading Funds Management & XAUUSD Equity Management Methods - Draw Down Money Management Chart

At 50% xauusd draw-down, a gold trader would have to make 100% on their invested gold capital - a feat accomplished by less than 5 percentage% of all traders globally - just to breakeven on a trading account with a 50% loss.

At 80% xauusd draw down, one must quadruple their equity just to take it back to the original equity. This is what's referred to as to "breakeven" - which means - get back to your original trading equity balance which you started with.

The more funds you lose, the harder it is to make it back to your original trading account size.

This is why as a trader you should do everything you can to PROTECT your trading account equity. Do not accept to lose more than 2% of your equity on any 1 single trade transaction.

Gold Money management is about only risking a small percentage of your capital in each trade so that you can survive your losing streaks and avoid a large drawdown on your account.

In day trading gold, traders use stop loss orders that are placed in order to minimize losses. Controlling risks in day trading involves putting a stoploss order order after placing an new trading order.

Effective Money Management

Effective in intraday Trading money management requires mitigating all the risks in day trading gold and one should create a money management system & a funds management in day trading plan. To be in intraday trading or in any other biz you must make decisions involving some risk. All in day trading factors should be analyzed to keep risk to a minimum & use the above equity management tips on this article - Draw Down Risk Management Chart.

Ask yourself? Some Tips

1. Can the risks to your in intraday trading activities be identified, what forms do they take? & are these clearly understood and planned for in your in intraday Trading plan? All the risks should be taken care of in your in intraday Trading plan.

2. Do you grade the risks encountered by you when in day trading gold in a structured way? - Do you have a money management strategy and a intraday Trading plan? have you read about this learning topic in day trading topic which is well covered explained here on this learn day trading web site for beginners.

3. Do you know max potential risk of each exposure for each trade that you place?

4. Are trading decisions made on the basis of reliable & timely market info & based on day trading strategy or not? Have you read about in intraday trading day systems on this learning site.

5. Are the risks large in relation to the trade turnover of your invested gold capital & what impact could they have on your profits margins and your trading account margin requirements?

6. Over what time period does the in intraday trading risks of your in intraday trading activities exist? - Do you hold in intraday Trading trade transactions long-term or shortterm? what type of day trader are you?

7. Are the exposures in trading one off or are they recurring?

8. Do you know enough about techniques in which intraday trading risks can be reduced or hedged and what it would cost in terms of profit if you didn't include these measures to cap potential loss, and what impact would it make to any upside of your profit?

9. Have your day trading funds management rules been adequately addressed, to ensure that you make & keep your in intraday Trading profits.

Day Trading Funds Management & Day Trading Equity Management Methods - Draw Down Day Trading Equity Management Chart - Draw Down Day Trading Funds Management Calculator

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