Trading Account Management

Process below describes the process of formulating oil money management and practical advices on formulating your own money management system in Oil - account management.

1. Keep the Necessary reserve (over and above the broker margin requirement)

This reserve is needed for unusual situations & it should be not less than 50% of invested equity. It is the first rule of account management in margin definition for opening orders. However, many experts & analysts advice more reserve of about 70%-90% of invested account capital for safe operation in crude oil.

2. Do not to invest more than 2%-6%

This is one of the principle that helps to avoid bankruptcy: never invest more that 2% on one market and do not to invest more than 6% in the total open crude trades.

3. Never risk a loss of more than 2% of invested money on any single trade

This is not the same as above, the above is never invest more than 5%, this is never to lose more than 2% on a single trade. In this case a trader risks only lose small part of his equity with an unprofitable order.

4. Diversify

The use optimal investment of your funds is that you should diversify to some degree. Just In case one trade losses, the trade order can be covered by profits of another trade.

5. money management rules should be well written down

On a piece of paper or better still in your trading plan. If you open trade orders then this orders should be within your oil money management guidelines.

6. Define your stop loss and take profit levels

When you are trading put your stop orders in order to avoid any huge losses or even bankruptcy. Profit taking levels will ensure you get additional profit by taking money out of the crude trading market. Analyze the situation and predict the future movement of price action and place orders accordingly. You can even use indicators and volatility of the to know where to place these orders.

7. Define of possible loss or profit before executing a trade

Consider only opening crude trades when you have the chance to get profit against loss ratio of 3:1. If you cannot do it then don't open the order.

Oil money management should seek to bring maximum profit to the traders account, keeping profitable trade orders as long as possible is a good strategy. Therefore, if you make some profitable trade orders you can have goods results.

8. Try to follow the rules of opening & closing the orders specified in your plan.

That way you'll get consistent results required for making profits in the crude market.

9. Do not revenge against the crude market

In this case, you'll not be interpreting the situation but you'll just be trading based on emotions & you'll lose more money.

10. Timely rest

Don't trade when you're exhausted, no matter how tempting the situation might seem, you might not get the profits that you can if you were to trade based on your schedule.

Considering these - Trading Account Management Rules and Guidelines can make you trade profitably. Try to create your own money management strategy that gives you good profits.