Have a capital management plan

Capital management planning is essential. In a capital management plan, you need to consider all possibilities and eliminate risks whenever possible.

Planning involves building a trading strategy that you trust and have a good risk/return for, following the plan. Here are a few factors a trader should consider for his capital management plan.

Trading volume

You need to be able to determine the volume of your trade, as it will determine how much you will be at risk. First of all, you need to determine how much risk you accept per trading and per day?

Always set stop loss and maximize profits

Before entering a trade, you must know what your profit target and exit time are. So you can be proactive in the trading process.

Many traders often exit a portion of their profits and then move their stops to manipulate the trend of the market to maximize profits if given the opportunity.

Know when to and not to trade

You need to understand your methodology, understand the strategy you follow. Once you understand your trading strategy, you will know when is the ideal time to trade. When to stand out of the market. This will avoid many complications in trading.

Trading frequency

Trading frequency affects the volume as well as the amount you accept the risk of a trade. The less you trade, the easier it will be to manage your risk.

In order to understand the trading frequency, you need to understand and have a long time trading with a certain method. Only then can you grasp the trading frequency of a day, week, month. From there, combining with other factors to make the risk management process smoother.

Important news

News is regularly published in the market. So this should be a factor you should not ignore when trading. Because when news comes, the price fluctuates more strongly than usual, which means your trading strategy will be riskier.

Do not combine trading methods

Many traders want to optimize their trading strategies, from entry points, stop losses, and take profits. So they combine the advantages of the methods together. But in practice, this method is not only ineffective but sometimes it also causes serious losses.

Helping a trader to have a good strategy, with reliable entry points, stop loss, and take profit points, it should be a strategy that follows the principles of your capital management plan and methodology.

In order to manage risk well, traders should create for themselves a plan, and follow it. When you implement a rules-based strategy and rules-based capital management, it becomes easier to control the trading process. Risks for each strategy you have also foreseen, from which trading psychology will also be much more stable.

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