Gold Trading Money Management System PDF Download

Risk and Money Management in Gold Trading

In any business, so as to make profit a trader must learn how to manage risks. To make profits in trading gold you need to learn about the various gold money management strategies discussed on this learn trading gold tutorial web site.

When it comes to gold online trading, the risks to be managed are potential 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 also known as draw-down - this is the amount of money you've lost in your trading xauusd trading account on a single xauusd trade.

If you have $10,000 trading gold capital & you make a loss in a single gold trade of $500, then your trading gold drawdown 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've lost in your trading xauusd trading account before you begin making profitable xauusd trades. For examples if you have $10,000 trading gold capital & make 5 consecutive losing trading gold trade positions with a total of $1,500 loss before making 10 winning xauusd trades with a total of $4,000 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 - Gold Risk Calculator - Position Size Gold Risk Management - Money Management Gold Excel Spreadsheet

Risk and Money Management in XAUUSD Trading

The trading gold example illustrated & described below shows the difference between risking a small percent of your trading gold capital compared to risking a higher percent. Good Risk and Money Management in Gold Trading principles requires you as a trader not to risk more than 2% of your total gold account equity on any one single xauusd trade.

Gold Percentage Risk Technique

2% & 10% Gold Money Management Rule - Risk and Money Management in Gold Trading

There's a big difference between risking 2% of your gold account equity compared to risking 10% of your equity on a single xauusd trade.

If you happened to go through a losing gold streak & lost only 20 xauusd trades in a row, you would have gone from starting gold trading account balance of $50,000 to having only $6,750 left in your xauusd trading 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 account which is only a 32% loss of your total gold trading account equity. This is why it is best to use 2% risk management strategy in trading gold.

The difference between risking 2% & 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 trading account if you risked only 2% of your xauusd account & lost all 20 trading gold transactions.

The point is you want to setup your Risk and Money Management in Gold Trading rules so that when you do have a loss making period, you will still have enough trading gold capital to trade next time.

If you lost 87.5% of your trading gold capital you would have to make 640% profit to get back to breakeven.

As compared to if you lost 32 % of your trading gold capital you would have to make 47 % profit to get back to the break-even. To compare it with the gold examples 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 breakeven if you were to lose a certain percentage of your trading xauusd trading capital.

Concept of Break Even - Gold Risk Calculator - Position Trading Risk Management

XAUUSD Account Equity & Break Even - Gold Trading Money Management System PDF Download - Gold Risk Calculator - Position Trading Risk Management

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

At 80% trading gold draw down, one must quadruple their trading gold equity just to bring it back to its original equity. This is what's known as to "breakeven" - which means - get back to your original gold trading account balance which you started with.

The more money you lose, 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 trading account equity on any 1 single xauusd trade.

Gold Money management is about only risking a small percent of your trading gold capital in each trade so that you can survive your losing streaks & 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 trading order.

Effective Gold Risk Management

Effective trading gold risk management requires controlling all the risks in trading gold and a trader should create a money management trading gold system & a money 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 interpreted to keep risk to a minimum & use above gold money management tips on this learn gold lesson - Gold Risk Calculator - Position Trading Risk Management.

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 trading risks encountered by you when trading gold in a structured way? - Do you've a money management strategy & a trading gold plan? have you read about this learn trading gold course which is well covered and discussed here on this learn trading gold guide tutorial for beginners.

3. Do you know the 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 market information & based on trading gold strategy or not? Have you read about trading gold systems on this learn trading gold course.

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

6. Over what 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 enough about techniques in which your trading gold risks can be reduced or hedged and what it would cost in terms of profit if you did not include these measures to reduce potential loss, and what impact would it make to any upside of your gold profit?

9. Have your gold money management guide-lines been adequately addressed, to ensure that you make and keep your trading gold profits.

Gold Trading Money Management System PDF Download - XAUUSD Risk Calculator - Position Size Gold Risk Management - Money Management Gold Excel Spreadsheet