Risk and Money management - important questions

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What is important to consider on a risk and money management?

For example, I can consider the account balance, lot and a risk percent based on this balance. So, trades can be opened having a total loss limited to this money limit (risk% of balance).

Do I need to consider some other questions?

 
Renato Takahashi:

What is important to consider on a risk and money management?

For example, I can consider the account balance, lot and a risk percent based on this balance. So, trades can be opened having a total loss limited to this money limit (risk% of balance).

Do I need to consider some other questions?

It's actually a very good question

In Trade or investing two things are very important  1. Money Management 2. What you want to trade or invest (a specific knowledge about Symbol or Ticker)

1. In Money Management always consider your  Margin you taking and very rare peoples knows Margin or Leverage is not a key of success and mostly peoples loose for example a Gold Price 1800 USD and peoples playing with 200 USD imagine a Unit price 1800 and broker allowing you to enter with few hundred in this condition how long you can run.  Without margin or minimum like 1:10 you can handle and can stay for long.  Lowest margin or without margin you can control your every lot size . In MM always set your goals for year or annual

2.  When you selecting a ticker or symbol you understand it first how much balance or capital you need Gold 1800 USD (current price)   Tesla over 1000 USD, KO (Coca Cola ) 56 USD  so every ticker comes with different price and for money management required a knowledge. 


I believe for this business a healthy knowledge and  minimum 3 years experience is matter, and with passing of time we understand it how wealth grows

 

Risk depends on your initial stop loss, lot size, and the value of the symbol. It does not depend on margin and leverage. No SL means you have infinite risk. Never risk more than a small percentage of your trading funds, certainly less than 2% per trade, 6% total.

  1. You place the stop where it needs to be — where the reason for the trade is no longer valid. E.g. trading a support bounce the stop goes below the support.

  2. AccountBalance * percent/100 = RISK = OrderLots * (|OrderOpenPrice - OrderStopLoss| * DeltaPerLot + CommissionPerLot) (Note OOP-OSL includes the spread, and DeltaPerLot is usually around $10/PIP but it takes account of the exchange rates of the pair vs. your account currency.)

  3. Do NOT use TickValue by itself - DeltaPerLot and verify that MODE_TICKVALUE is returning a value in your deposit currency, as promised by the documentation, or whether it is returning a value in the instrument's base currency.
              MODE_TICKVALUE is not reliable on non-fx instruments with many brokers - MQL4 programming forum (2017)
              Is there an universal solution for Tick value? - Currency Pairs - General - MQL5 programming forum (2018)
              Lot value calculation off by a factor of 100 - MQL5 programming forum (2019)

  4. You must normalize lots properly and check against min and max.

  5. You must also check FreeMargin to avoid stop out

Most pairs are worth about $10 per PIP. A $5 risk with a (very small) 5 PIP SL is $5/$10/5 or 0.1 Lots maximum.

 
William Roeder #:

Risk depends on your initial stop loss, lot size, and the value of the symbol. It does not depend on margin and leverage. No SL means you have infinite risk. Never risk more than a small percentage of your trading funds, certainly less than 2% per trade, 6% total.

  1. You place the stop where it needs to be — where the reason for the trade is no longer valid. E.g. trading a support bounce the stop goes below the support.

  2. AccountBalance * percent/100 = RISK = OrderLots * (|OrderOpenPrice - OrderStopLoss| * DeltaPerLot + CommissionPerLot) (Note OOP-OSL includes the spread, and DeltaPerLot is usually around $10/PIP but it takes account of the exchange rates of the pair vs. your account currency.)

  3. Do NOT use TickValue by itself - DeltaPerLot and verify that MODE_TICKVALUE is returning a value in your deposit currency, as promised by the documentation, or whether it is returning a value in the instrument's base currency.
              MODE_TICKVALUE is not reliable on non-fx instruments with many brokers - MQL4 programming forum (2017)
              Is there an universal solution for Tick value? - Currency Pairs - General - MQL5 programming forum (2018)
              Lot value calculation off by a factor of 100 - MQL5 programming forum (2019)

  4. You must normalize lots properly and check against min and max.

  5. You must also check FreeMargin to avoid stop out

Most pairs are worth about $10 per PIP. A $5 risk with a (very small) 5 PIP SL is $5/$10/5 or 0.1 Lots maximum.

Thanks William for the nice comment!! It will be very useful to finish my risk management strategy!!

 
Waseem Raza #:

It's actually a very good question

In Trade or investing two things are very important  1. Money Management 2. What you want to trade or invest (a specific knowledge about Symbol or Ticker)

1. In Money Management always consider your  Margin you taking and very rare peoples knows Margin or Leverage is not a key of success and mostly peoples loose for example a Gold Price 1800 USD and peoples playing with 200 USD imagine a Unit price 1800 and broker allowing you to enter with few hundred in this condition how long you can run.  Without margin or minimum like 1:10 you can handle and can stay for long.  Lowest margin or without margin you can control your every lot size . In MM always set your goals for year or annual

2.  When you selecting a ticker or symbol you understand it first how much balance or capital you need Gold 1800 USD (current price)   Tesla over 1000 USD, KO (Coca Cola ) 56 USD  so every ticker comes with different price and for money management required a knowledge. 


I believe for this business a healthy knowledge and  minimum 3 years experience is matter, and with passing of time we understand it how wealth grows

I´m considering a x% of loss on each actual position, even if there are more than one order opened. If one order is closed, there is a ammount of money to open another one and so on...if all orders get stoploss you will loose this x% of your balance. Obviously a expert advisor can have 2 or more "loss positions", resulting in a bigger balance drawdown, but it´s from the game...rsrs... you need to adjust to have more profit than losses and let trades goes on!!

 
Renato Takahashi:

What is important to consider on a risk and money management?

For example, I can consider the account balance, lot and a risk percent based on this balance. So, trades can be opened having a total loss limited to this money limit (risk% of balance).

Do I need to consider some other questions?

It's not recommended to use more than 2% in a single trade, then you could setup SL distance by ATR for each symbol as they're not moving all in the same range.

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