Ten Stock Money Management Strategies

The process below describes the process of formulating stocks money management and practical advices on formulating your own stocks money management system in Stock - stocks account management.

1. Keep the Necessary reserve (over and above the stocks broker margin requirement)

This reserve is needed for unusual situations and it should be not less than 50% of invested equity. It is the first rule of stocks account management in margin definition for opening stocks orders. However, many experts and analysts advice more reserve of about 70%-90% of invested stocks account capital for safe operation in stocks.

2. Do not to invest more than 2%-6%

This is one of the principle that helps to avoid bankruptcy: never invest more that 2% on one market and do not to invest more than 6% in the total open stock trades.

3. Never risk a loss of more than 2% of invested money on any single trade

This is not the same as above, the above is never invest more than 5% , this is never to lose more than 2% on a single trade. In this case a stocks trader risks only lose small part of his equity with an unprofitable order.

4. Diversify

The use optimal investment of your funds is that you should diversify to some degree. Just In case one trade losses, the order can be covered by profits of another trade.

5. Stocks money management guidelines should be well written down

On a piece of paper or better still in your trading plan. If you open orders on this orders should be within your stocks money management guidelines.

6. Define your stop loss and take profit levels

When you are trading put your stop stocks orders in order to avoid any huge losses or even bankruptcy. Profit taking levels will ensure you get additional profit by taking money out of the stock market. analyze the situation and predict the future movement of stocks price action and place orders accordingly. You can even use indicators and volatility of the stocks instrument to know where to place these orders.

7. Define of possible loss or profit before executing a trade

Consider only opening stock trades when you have the chance to get profit against loss ratio of 3:1. If you cannot do it then don't open the order.

stocks money management should seek to bring maximum profit to the stocks traders account, keeping profitable orders as long as possible is a good strategy. Therefore, if you make some profitable orders you can have goods results.

8. Try to follow the rules of opening and closing the stocks orders specified in your plan.

That way you will get consistent trading results required for making profits in the stocks market.

9. Do not revenge against the stock trading market

In this case, you will not be analyzing the situation but you will just be trading based on emotions and you will lose more money.

10. Timely rest

Do not trade when you are exhausted, no matter how tempting the situation may seem, you might not get the profits that you can if you were to trade based on your stocks schedule.

Considering these - Stocks Account Management Rules and Guidelines can make you trade profitably. try to develop your own stocks money management strategy that gives you good profits.