Trade Gold Trading

Gold Account Management

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:reward ratio.

Account Management Strategies Methods

This method is used to increase the profitability of an investment strategy by trading only when you've the potential to make more than Three times more than what you're 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. XAUUSD Chart below shows you how:

Trading Risk to Reward Ratio Equity Management Rules and Percentage Risk Technique Money Management Rules

In the first example, you can see that even if you only won 50% of your trades in your trading account, you'd still make a profit of $10,000 dollars.

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

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

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

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

This type of investment strategy makes no sense & you'll lose on the long term.

Account Management Strategies Methods

The % risk technique is a method where you risk the same percent of your trading account equity balance per transaction - Account Management Techniques.

% risk based method says that there will be a certain percentage of your trading account equity balance that's at risk per transaction. To calculate the percentage% risk per each trade, you need to know 2 things, the percentage risk that you've chosen & lot size of an open order so that to calculate where to put the stoploss order order. Since the percentage% is known, we shall use it to calculate the lot size of the trade order to be placed in the market, this is known as position size.

Example

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

Then 2 % is equivalent to $1,000

Other factors to consider include:

  • Maximum Number of Open Trade Positions

A point which to consider is the max number of open trade transactions that's the max number of trades that you want to be in at any given time. This is another factor to decide when managing trading account capital.

If for example, you chose a 2 %, you might also say chose to be in a maximum of 5 trade transactions 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 trading account balances that day.

  • Invest Sufficient Capital

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

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

  • Exercise Discipline

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

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

Trading Account Management Basics

Gold trading equity management, is the foundation of any system as it helps traders to improve their chances to get profit trading on the market. It is especially important when transacting in the trading leveraged market, considered to probably be one of the liquid financial trading markets among the many that are there but the same time also to be among one of the riskiest.

If you want to invest successfully in the market you should realize that it's very important to have an effective gold trading strategy of trading money management because you will be using leverage to place your orders - 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 trading won't yield any profits. In this case an investor has to formulate their own gold account management guide-lines, the success of each trader depends on their individual character traits. Hence, every makes his own gold trading strategy & formulates their own gold trading money management guidelines based on the above guide-lines.

When you're placing your orders put your stop loss orders in order to avoid huge losses. Stoploss orders can also be used to lock in profit.

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

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

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