Money Management in Forex

When trading Forex, managing your money is essential to your long-term success. It is very important to practice risk and money management to sustain in the market and to be successful in forex trading.
 
Money management may seem to be an extra, boring activity for a forex trader when you have to focus on making your strategy work so that you can make profits. But if you are not using your money correctly, even the most profitable strategy won’t get you the anticipated results.
 
Money management is very important for a forex trader as it is a defensive strategy that helps to preserve the amount invested by the trader. Also, the trader should keep in mind, never to take the risk that he can’t afford.
 
DepthTrade said:
Test
A client wants you to trade 1,000,000 USD
Investing in forex is close to impossible, so this leaves one having to re-position the cash every so often, let's say every 24 hours.
How do you evenly spread that across the main 14 Major pairs?
This question is directed at anyone who supposedly trades for a company.
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If a company is hedging exposure, it'll usually be done through options rather than spot with the counter-party delta hedging as price moves towards/away from the strike. But if you're talking about a spot position, most of the t1s use vwap running 24hrs a day with occasional spoof orders to leg in a position over hours, days, sometimes weeks. During high volatility parts of the day they enter dozens of times a minute. A couple of the smaller banks use twap but this makes their positions more transparent so less used. To give you an idea of scale, in the weeks prior to Ukraine, Barclays were on the other side of Asian Pacific for 3 solid weeks on gbpusd.
Contrary to what you said about having zero idea of risk, they have extremely rigid risk limits on every aspect of their business to an eye-watering degree.
And no I don't work for a bank; if I did I'd have just broken a handful of NDAs.
 
trismes said:
If a company is hedging exposure, it'll usually be done through options rather than spot with the counter-party delta hedging as price moves towards/away from the strike. But if you're talking about a spot position, most of the t1s use vwap running 24hrs a day with occasional spoof orders to leg in a position over hours, days, sometimes weeks. During high volatility parts of the day they enter dozens of times a minute. A couple of the smaller banks use twap but this makes their positions more transparent so less used. To give you an idea of scale, in the weeks prior to Ukraine, Barclays were on the other side of Asian Pacific for 3 solid weeks on gbpusd.
Contrary to what you said about having zero idea of risk, they have extremely rigid risk limits on every aspect of their business to an eye-watering degree.
And no I don't work for a bank; if I did I'd have just broken a handful of NDAs.
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I am not talking about hedging, done right that would equate to zero gain or loss, I am talking about making profit with focused diversified directional moves. Plus you are forced to possibly use prices not at exact spot price by using options.
If you are wanting to hedge, why would you not put it on immediately?? You are just extending your risk window, let alone over the coarse of days/ weeks. Are you telling me the professionals at Barclays faded in over days/ 3 weeks over an event that would be completely priced in by that time? Wouldn't one want to be in immediately?
Smaller banks needing to be transparent? Nobody is large enough to move this market for any amount of time and if they are, they don't have both the capital AND intelligence to do so, if by chance they are both, they would be trading larger time frames anyhow.
They have zero idea of risk, that is why even at the top the failure rate is 99.97%
You do not know what you are talking about, just illogical nonsense.
 
Ha ok mate good luck in your endeavours, i thought you wanted an answer not an argument, but your call. There’s no failure rate of 97.5% in fx, only at retail speculative level. There’s a difference between hedging exposure and directional speculation, both affect the spot market in different ways. There’s a difference in how different banks leg in 100 yards. There’s huge differences in timescales of trades depending on the reason for them. Etc etc but eh yeah, pure nonsense
 
trismes said:
Ha ok mate good luck in your endeavours, i thought you wanted an answer not an argument, but your call. There’s no failure rate of 97.5% in fx, only at retail speculative level. There’s a difference between hedging exposure and directional speculation, both affect the spot market in different ways. There’s a difference in how different banks leg in 100 yards. There’s huge differences in timescales of trades depending on the reason for them. Etc etc but eh yeah, pure nonsense
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All that may be true, but either way you don't have a clue.
Since you are so good at this, tell us where the market is going this coming week. You have about 30 hours until open, good luck.
 
I could be your performing monkey! And a pissing match! Or maybe it’s time you rolled your sleeves up and study some fx time and sales and start piecing it together.
 
Money management is quite important to be considered in your trading, just try to stick with low r/r ratios in your trade. Plus if you want to maintain trading for long time, then it is best not to rush in. And follow the money management rule attentively!
 
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