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. Gold Chart below shows you how:

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

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 to reward ratio, your chances of being profitable as a trader are much greater even if you have a lower win percentage for your 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 dollars.

Because you've 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 will 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 is at risk per trade. To calculate the % risk per each trade, you need to know 2 things, the percentage risk that you've chosen and lot size of an open order so as to calculate where to put the stop loss order. Since the percent 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 equal to $1,000

Other factors to consider include:

• Maximum Number of Open Trade Positions

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

If for example, you chose a 2 %, you may also say chose to be in a maximum of 5 trade positions at any one given time. If you open 4 trade positions & 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 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 one can master to become profitable. Discipline is the ability to plan your work and 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're 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 that's required so as to be profitable.

Trading Account Management Basics

Gold trading equity management, is the foundation of any system as it helps investors to improve their chances to get profit trading on the market. It is especially important when transacting in the trading leveraged market, considered to be probably one of the liquid financial markets among the many which are there but the same time also 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. Therefore, every makes his own gold trading strategy & formulates their own gold trading money management guidelines based on the above guide-lines.

When you are placing your orders put your stop loss orders in order to avoid huge losses. Stop loss orders also can 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 strategy & try to create your own strategy that will possibly give you good profits when trading with it.