Rules for the successful implementation of money management

The concrete rules for successful implementation of money management.

1. Never use the Martingale approach.

2. Never risk more than 1-3% of your balance on one order. It is advisable the risk to be 1%.

3. For every other order use the same pro cent of the remaining balance. The remaining balance is equal to the initial balance minus the sum set aside for the previous orders.

4. To add to an already open position, never exceed the initially risked amount. It is advisable to add a smaller amount than the original position.

5. The risk amount for all transactions must not exceed 30% of the total amount. This means not to make more positions when the residual balance reaches 70% of the total balance.

6. Try the Earnings Efficiency / Allowable Loss Enable by Unit. This odds ratio is better than 2 or the profit you expect to receive from the deal is twice as big as the amount you want to risk. Ie. Your limit order is twice as big as your stop. If for a transaction this ratio is less than 1, it means that the potential profit will be less than the amount we are willing to risk. In other words, the profit does not justify the risk.

7. Alternatively, diversify your portfolio by trading in different markets: stocks, currencies, commodities, etc. When diversifying your account into a portfolio of instruments, always consider the amount of risk involved with the degree of risk associated with the instrument. For example, in the Forex market, the risk is higher than in the stock market and even higher than the bond market.