Trade Stock Indices

Ten Money Management Methods

Process below describes the process of formulating indices money management and practical advice and tips on formulating your own indices money management system in Index -trading account management.

1. Keep the Necessary reserve (over & above the online 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 trading account management in margin definition for opening stock orders. However, many experts & analysts advice more reserve of about 70 % - 90 % of invested indices trading account capital for safe operation in stock indices trading.

2. Don't to invest more than 2% - 6%

This is one of 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 stock trades.

Account Management Guidelines

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

4. Diversify

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

Account Management Guidelines

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

6. Define your stop loss and take-profit levels

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

Trading Account Management Guidelines

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

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

8. Try to follow the rules of opening & closing the trade orders specified on your trading plan.

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

9. Do not revenge against the stock trading market

In this case, you'll not be interpreting the situation but you'll just be trading based on emotions & you will 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 as a trader can if you were to trade based on your trading schedule.

Considering these - Trade Account Management Guidelines & Guidelines can make you trade profitably. Try to develop your own indices money management strategy that gives you good profits.

Study More Courses and Tutorials:

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Forex Trading Seminar

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