Recently, I chatted with many trading friends to discuss what is the most important thing in trading? I heard that almost 80% of people think that technology is the foundation, and money management is the key. So what is money management? How should we do a good job in money management?
In layman's terms, fund management is to allocate the money in your hands clearly and clearly, and every fund has a place for use. Through reasonable allocation of funds, you can reduce your risk and obtain greater profits. Next, we will describe the practical use of fund management around three sections.
1. Regarding the use of leverage,
why I am going to put leverage in the first section, because the reason for many traders’ liquidation is that the multiple of leverage is too high. Their thinking is that the higher the leverage, the greater the risk. Here I have to make a correction. The purpose of leverage is actually to expand your capital utilization rate. Your so-called high risk lies in the trader's personal mentality, self-discipline and execution ability. For example, "fire" can bring warmth and light to human beings, but it can also bring disasters. In the final analysis, it is the user's problem. Even transactions without leverage are also risky in the hands of these people.
Personally, I usually choose 400 times leverage, but I operate according to 100 times, because the liquidation ratio of each platform is different. I choose a large leverage multiple to improve my available capital ratio, so relatively It is said that it will be farther away from the liquidation.
I have met some friends who know that the fund management is only their own available margin ratio. Many people will continue to increase their positions, so that the available margin ratio is getting closer and closer to the liquidation ratio. So they are constantly expanding the risk rather than reducing the risk.
2. Before entering the market,
we will make a fund management plan. First of all, we will divide it into two sets of fund management strategies. They are trend fund management and shock fund management. Because these are two different trading conditions, there must be two different trading strategies.
Trend market:
After we have judged the trend, our plan is to first consider how much risk is, and whether the percentage of this risk to the total amount of funds is within our regulations. If it exceeds the risk we set, then there are two situations to solve, one is to reduce your entry position until the stop loss range is within the value in the fund management plan, and the other is very simple to not enter the market.
After entering the market, we will enter the market again to increase the position. At this time, there will be two situations again. Either the market broke out suddenly, or it continued slowly along the trend. You must set a strategy for yourself to enter the market with a half position or a normal position, but the premise is that the profit of your last order must cover the loss of your current order. If the first order is a loss, we generally will not choose to enter the market even if a signal has been given.
Oscillating market:
In the oscillating market, many traders adopt the Martin strategy. Even if they make money 99 times, they are afraid that the 100th unilateral market will eat up all the previous profits or even liquidate their positions. Because I am doing trend trading, in the volatile market, the first thing is to reduce the cycle to trade, and the second is to reduce the original position by 3 times. Even if my stop loss is knocked out, it will not affect the overall situation of my funds. Then set a strategy for yourself. If you wipe out the stop loss three times in a row, it will largely prove that there is a problem with the judgment of the market direction. The above is just my strategy. When you do it yourself, you should cooperate with your trading system to set a strategy for yourself.
3. Regarding the application of strategy
Multi-currency hedging: Generally speaking, those who do hedging like to do some related currencies for combined hedging. Before hedging, I suggest that you need to look at the trend and fluctuation of this product in the recent period Amplitude. This is very critical, because the results of two different currencies with different attributes are not the same, and then focus on one product to enter the market for hedging.
Hedging of the same product on different platforms: Hedging is carried out by using the different handling fees of each trading platform. Although the profit is not much, it can be relatively stable. An Islamic account is a good reference because there is no overnight fee.
Fixed-point transactions: There are clear take-profits and stop-losses, most of which are based on a clear profit-loss ratio as a reference. This kind of operation also requires you to be particularly familiar with the variety you are trading and know how much it fluctuates. Then cooperate with your capital position management.
Then again, I don't think fund management takes up a large proportion. My point of view is that each item is very important and indispensable. They all need to cooperate with the team to form a perfect closed-loop trading system. Let’s talk so much about fund management first, because these are just methods. The most important thing is to implement it into the real offer and continuously summarize and improve it. In the next issue, we will add some practical fund management applications.
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