Methods of money management.

Working in Forex traders should be able to distribute capital correctly, calculate the amount of money involved in a deal to get sufficient profit; and in case of losses not to lose all deposited money.

    For these purposes special methods of money management exist:

• Absence of money management. Many traders who open a position don't count money used in operations, don't calculate approximate profit and possible losses. This is one of the tactics. But if the capital is not large it will disappear after several deals.
• Multilateral contracts. Opening several positions of different instruments on Forex, such as EURUSD and EURGBP in the case of prices moving in the right direction, the trader can get good profits from these contracts. Both profit and loss in such deals can be significant.
• Fixed sum of money. Depending on the amount of money in his account the trader decides how much he can put at risk when opening one or another position. The trader doesn't exceed the limit he has fixed himself.
• Fixed percentage of capital. This method is similar to the previous one with the only difference being that the trader sets the percentage of the capital and not the amount of the capital itself.
• Coordination of profits and losses. It is necessary to keep statistics of all operations (number of losses, wins and their connection). This connection shows that losses and wins take turns or several losses are followed by several successful operations. It makes sense to increase the volume of the position after a number of losses hoping for winning and, on the contrary, decrease after a positive period expecting losses again.
• Intersection of the curved moving capital average. The principle is based on the well-known method of moving average as a signal for entering the market or leaving it. Moving averages (long one and short one) are used for estimating the results of arranged deals. If the short curved is above the long one it's a signal for opening positions to gain profit; and if it's below it then better times are still to come.

Having chosen one or another method of money management for trading, you will be able to use your money rationally, and it will bring profit. Methods of money management are applied before opening of positions.