Gold Trading Account Management

The best way to practice successful gold trading money management in Gold is for an investor to keep losses lower than the profits they make. This is called risk to reward ratio.

XAUUSD Trading Account Management Methods

This method is used to increase the profitability of an investment strategy by trading only when you have the potential to make more than 3 times more than what you are risking.

If you invest using a high risk reward ratio of 3:1 or more, you significantly increase your chances of becoming profitable in the long run. The Chart below shows you how:

In the first gold trading example, you can see that even if you only won 50% of your gold trade transactions in your xauusd trading account, you would still make a profit of $10,000.

Even if your win rate went lower to about 30% you would still end up profitable - Gold Trading Account Management Principle - Gold Trading Money Management.

Just remember that whenever you have a good risk to reward ratio, your chances of being profitable as a gold trader are much greater even if you have a lower win percentage for your gold trading strategy.

Never use a risk to reward ratio where you can lose more pips one gold trade than you plan to make. It does not make sense to risk 1,000 dollars in order to make only 100 dollars.

Because you have to win 10 times which to make the 1,000 dollars back. If you ONLY lose once you have to give back all your gold trading profits.

This type of investment strategy makes no sense and you will lose on the long term.

XAUUSD Trading Account Management Methods

The percentage risk method is a method where you risk the same percentage of your account balance per transaction - Gold Trading Account Management Methods.

Percentage risk based method says that there will be a certain percentage of your gold trading account equity balance that is at risk per trade. To calculate the percent risk per each gold trade transaction, you need to know two things, the percentage risk that you've chosen and lot size of an open gold order so as to calculate where to put the stop loss gold order. Since the percent is known, we shall use it to calculate the lot size of the gold trade order to be placed in the xauusd market, this is known as position size.

Example

If you have an account balance of $50,000 in your xauusd trading account and risk percent is 2%

Then 2 % is equal to $1,000

Other factors to consider include:

• Maximum Number of Open Gold Trade Positions

A final point to consider is the maximum number of open gold trade positions that is the maximum number of xauusd trades that you want to be in at any one given time. This is another factor to decide when managing xauusd trading account capital.

If for example, you chose a 2%, you may also say chose to be in a maximum of 5 gold trade positions at any one given time. If you open 4 trade positions and all 4 of those positions close at a loss on the same day, then you would have an 8% decrease in your account balances that day.

• Invest Sufficient Capital

One of the worst mistakes that investors can make in gold trading is attempting to open a gold trading account without sufficient capital.

The gold trader with limited capital will be a worried investor, always looking to minimize losses beyond the point of realistic trading, but will also be frequently taken out of the gold trade transactions before realizing any success out of their gold trading strategy.

• Exercise Discipline

Discipline is the most important thing that a gold trader can master to become profitable. Discipline is the ability to plan your work and work your plan.

It is the ability to give a gold trade the time to develop without hastily taking yourself out of the xauusd market simply because you are uncomfortable with risk. Discipline is also the ability to continue to stick to your gold trading plan even after you have suffered losses. Do your best to cultivate the level of discipline required to be profitable.

XAUUSD Trading Account Management Basics

gold trading money management, is the foundation of any gold trading system as it helps investors to improve their chances to get profit trading on the xauusd market. It is especially important when transacting in the gold trading leveraged gold market, which is considered to be probably one of the more liquid financial market among the many but at the same time one of the riskiest.

If you want to invest successfully in the xauusd market you should realize that it is very important to have an effective gold trading strategy of gold trading money management because you will be using gold trading leverage to place your gold orders - Gold Trading Account Management Basics.

The difference between average profits and losses should be strictly calculated, the profits on average should be more than the losses on average when trading, otherwise gold trading will not yield any profits. In this case an investor has to formulate their own gold trading account management rules, success of each person depends on their individual traits. Therefore, every investor makes his own gold trading strategy and formulates their own gold trading money management guidelines based on the above guidelines.

When you are placing your gold orders put your stop loss gold orders in order to avoid huge losses. Stop loss orders can also be used to lock in profit.

Consider the chance to get profit against chance to get loss as 3:1 - this risk: reward ratio should be favorable more on the profit side.

Considering these gold trading rules and guidelines, you can use them to improve profitability of your gold trading strategy and try to develop your own gold trading strategy that will possibly give you good profits when trading with it.