What Money Management rules you follow

Discussion in 'Risk & Money Management' started by mark8tune, Oct 11, 2016.

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How important is MONEY MANAGEMENT for you ?

This poll will close on Oct 11, 2017 at 8:02 AM.
  1. Money Management is the most important part of trading.

    29 vote(s)
    80.6%
  2. It is good but it is not that important.

    1 vote(s)
    2.8%
  3. I think it is important but never followed any.

    5 vote(s)
    13.9%
  4. I think it is important but I could find a plan for me.

    3 vote(s)
    8.3%
  5. It is completely useless in trading.

    1 vote(s)
    2.8%
Multiple votes are allowed.
  1. Tarang58

    Tarang58 New Member

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    I want to trade with one lot of nifty future for positional.
    Now can some expert guide me about how to trade it by applying money management?I will hedge it at the end of day buy buying/selling option to keep it protected from sudden overnight gap up or down.Next morning i will square up in the morning by watching its moment.I will use super trend as main indicator so what other indicators are useful with it?
    So my problem is how much to keep stoploss for both futures as well option?
    Can some one who is trading in this manner guide me by giving practical example?
     
    mark8tune likes this.
  2. suri112000

    suri112000 Well-Known Member

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    you have not mentioned which timeframe you are using for supertrend.

    if you are using 5 min TF for positional, the Gaps against the trade are offset by Gaps in favour in the long run.

    If you donot want to risk Gaps against position, you will loose opporutnities when Gaps are in favour.

    since option is only O.5 delta, you hedge your positions with ATM option by EOD. Next day morning, you close the option position by 09:20. It is only half the protection.

    you should be ready for 200 points Gaps against the position without any heart breaks when you trade supertrend in 5 min TF.:D

    but hedging with option at every EOD can give some soothness to your heart.

    make sure you are not loosing the edge of supertrend by over extending hedges.

    all the best.
     
    Tarang58 and mark8tune like this.
  3. Tarang58

    Tarang58 New Member

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    Thanks suri sir for your valuable guidance.
    I will be using 5 min time frame & according to you i should use ATM option for hedging at the end of day.So how many lots of option should i purchase for one lot of nifty for perfect hedge?
    First of all is it advisable to purchase option for overnight protection?If not then what is the proper way?
     
    mark8tune likes this.
  4. rkripal

    rkripal Well-Known Member

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    Money management is the key factor in a successful trader's career. But one thing is sure, no matter what MM rules you follow, if your trading account is under capitalized then you will have very difficult time getting through.

    In simple terms i have divided MM in two parts. Trade management and Account management. Trade management is something we usually do. We enter a trade and
    place a SL to protect capital. Keep modifying it as market moves, keep booking partial profits.

    Account management is the position size i follow. I dont change position after every trade. I keep fixed targets where i would increase qty at the same time i also keep account SLs where i would decrease qty. Now i cant say about a day trader as i am not a day trader. But being a swing trader i take less amount of trades compared to day trader. As a result i can take risk of more than 3% per trade because i hardly make 4 to 7 trades in a month in nifty. In my view a day trader making 3 to 5 trades a day should not risk more than 0.5% of capital per trade. Now you would say that's very small risk. I would say it would keep you in the game psychologically. Even after five SL hits you would loose only 2.5%.

    Remember you succeed in this business for being smart, not being brave.MM is directly connected with trading psychology. If losing money gives you sleepless nights, there is something to ponder over.
     
    vsaran, TraderRavi, sree26 and 3 others like this.
  5. Dom Perignon

    Dom Perignon Active Member

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    my penny worth :)

    IMO trading is a business and we have to manage it as such ..... learn how to write a sound-profitable business plan for the trading

    Money Management
    You will learn about different money management techniques and which one you should use in your trading. Apply this strategy in your trading to manage your risk accordingly: Don't risk too much, but don't risk too little either, otherwise you will never grow your account. You won't be able to trade for a living if you only trade 1 contract, so you MUST learn when to increase the number of contracts based on your trading account size.

    Trade Management
    Don't let a winning trade turn into a losing trade. Learn how to properly manage a trade and the concept of "the free trade."

    Business Management
    Trading is a business, and you have to manage it as such. Learn how to write a sound business plan for your trading.... Very few traders treat their trading as a business, but those who do have a significant advantage.

    of course that is a base then there is Mind (psychology) Method (strategy-plan) and so on :)
     
    mark8tune likes this.
  6. balakumaran

    balakumaran New Member

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    afl required to control the risk...that is in a single stock the risk is more then our level then trade should not happen further . our trade will continue in other stocks of portfolio.
     

  7. NetFreak

    NetFreak Member

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    There are many things that is needed to learn in Forex Trading like Risk Management and Money Management and lots more.
     
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