Ten Indices Money Management Methods
Process below describes the process of formulating indices trading money management and practical advices on formulating your own indices trading money management system in Indices Trading -indices trading 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 indices trading account management in margin definition for opening stock indices 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. 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 stock indices trades.
Indices Trading Account Management Rules
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 trading profits of another trade.
Stock Indices Trading Account Management Rules
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 trading money management guidelines.
6. Define your stop loss and take profit levels
When you are trading put your stop stock indices 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 stock indices trading market. Analyze the situation and predict the future movement of stock indices trading price action and place orders accordingly. You can even use indicators and volatility of the stock indices trading price to know where to place these orders.
Indices Trading Account Management Rules
Consider only opening stock indices 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.
Indices trading 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 indices orders specified in your plan.
That way you'll get consistent trading results required for making profits in the stock indices market.
9. Do not revenge against the stock indices trading market
In this case, you'll not be interpreting the situation but you will just be trading based on emotions & you'll lose more money.
10. Timely rest
Don't trade when you are 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 indices trading schedule.
Considering these - Indices Trading Account Management Rules and Guidelines can make you trade profitably. Try to develop your own indices trading money management strategy that gives you good profits.
