Trade Gold Trading

Gold Account Management

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

Account Management Strategies

This method is used to increase the profitability of an investment strategy by trading only when you've 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. XAUUSD Chart below displays to you how:

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

In the first example, you as a trader can see that even if you only won 50% of your trade positions in your trading account, you would 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've got 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 trading strategy.

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

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

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

Account Management Strategies

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

% risk based method/technique says that there'll be a certain percentage of your account equity balance that is at risk per trade. To calculate the percentage risk per each trade position, you need to know 2 things, the percentage risk that you have chosen and contract/lot size of an opened/executed trade order so that to calculate where to put the stoploss 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 referred to as position size.

Example

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

Then 2 % is equivalent to $1,000

Other factors to consider include:

  • Maximum Number of Open Trades

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

If e.g., you select a 2 %, you might & may also say choose to be in a maximum of 5 trade transactions at any one specified time. If you open 4 trades and all 4 of those trading positions close-out at a loss on the same trading day, then you'd have an 8% decrease in your trading account balances that day.

  • Invest with Sufficient Capital

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

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

  • Exercise Discipline

Discipline is the most key thing which a trader can master to become profitable. Discipline is the ability to plan your work and work your trade 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've suffered losses. Do your best to develop the level of discipline that is needed so that to be profitable.

Trading Account Management Basics

Gold trading equity management, is the foundation of any strategy as it helps traders to improve their chances to get profit trading in the market. It's especially key 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 at the same time to also be among one of the riskiest ones.

If you want to invest successfully in the market you should realize that it's very essential to have an effective gold strategy of trading money management because you'll be using leverage to place your orders - Account Management Basics.

The difference between average profits & losses should be strictly calculated, the profits on average should be more than the losses on average when trading, otherwise won't yield any profits. In this instance a trader has to formulate their own gold account management guide-lines, the success of every 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 and so as to avoid huge losses. Stop Loss orders can also be used to lock on the profits.

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

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

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