Ideas for money management?

<p>Money management is a critical tactic that all traders must employ in order to preserve their capital. By managing their risk and trading size appropriately, traders can ensure that they are able to stay in the market for the long haul and capitalise on profitable trading opportunities.</p><p id="isPasted">3 money management techniques for traders</p><p>1. Allocation of funds</p><p id="isPasted">Allocation of funds is usually done on a high level – which means deciding which market a trader will trade in. Do they choose forex or commodities? And do they have enough capital to trade both of those markets?</p><p>While traders definitely need to decide what to trade, they also need to have a system on how much funds to allocate for each market being traded.</p><p id="isPasted">How to apply allocation of funds in trading?</p><p>Let’s say a trader has $10,000 in trading capital. This may be too little if they want to trade every market financial market.</p><p>This is when to be selective. Traders need to make a decision on which markets to trade.</p><p>After analysing the different markets, the trader decided to trade both forex and commodities. By doing this they have narrowed down the markets and then can allocate $5,000 for each market with a 50/50 split of their trading capital.</p><p>2. Position sizing</p><p id="isPasted">Position sizing is important as traders can pre-set how much money they want to put into a specific trade.</p><p>How to apply position sizing?</p><p>Following the example above, the trader can use position sizing by allocating a certain amount per trade from the two lots of $5,000 they decided to use trading forex and commodity markets.</p><p>For example, the trader can allocate say $1,000 to a EUR/USD trade, another $1,000 to a USD/JPY trade, and another $1,000 to the USD/CAD trade.</p><p>For the commodities trades, they can do the same and allocate $1,000 to trade WTI Oil, another $1,000 to trade&nbsp;gold&nbsp;and another $1,000 to trade&nbsp;silver.</p><p>Please keep in mind that these examples don’t take into consideration the&nbsp;margin&nbsp;level you will use on your trades. We have used dollar values only to simplify the examples.</p><p>3. Use of stop-loss</p><p id="isPasted">When using a stop-loss order, traders draw a line in the sand and limit the number of losses they want to be exposed to.</p><p>Most trading platforms now have built-in stop-loss levels that can be adjusted to suit different trading styles and risk management levels.</p><p>The other important benefit of using a stop-loss order is that traders don’t have to sit and wait in front of a computer to monitor the price movements. When setting up your preferred stop loss level, most trading platforms will execute it once the level is hit.&nbsp;</p><p>TIP:&nbsp;A stop loss is an order to sell an asset when it reaches a certain price and is designed to help limit a trader's loss on a position. It helps to have some protection in place in case the market moves against them and they are unable to&nbsp;exit the position&nbsp;themselves.</p><p>Now that we’ve discussed some of the best money management strategies for traders, let’s understand the dangers you could face by not implementing a money management plan.</p>