Basics of Money Management on the Stock Exchange (trading/investing): How to Minimize Risk and Maximize Profit

Basics of Money Management on the Stock Exchange: How to Minimize Risk and Maximize Profit

Money and Risk management on the stock exchange + Position management is one of the most important things that all investors and traders must master. But they don’t know! Many people neglect this area and it is one of the reasons why most retail traders are loosing money and loosing traders while top quantitative funds and hedge funds are making billions.

Risk and Money / Position management can and probably will largely affect whether you make money, loose or, in the case of bad Money management, even erase the entire account. It has such a big impact, and we will show it with simulations and calculations in our various articles. But first we need to understand the basics.

Basics of Money Management on the Stock Exchange: How to Minimize Risk and Maximize Profit

Let’s talk: What is Money Management ? Why is Money Management Important?

How Much to Risk on One Trade?

Loss setting

How to Set Stop Loss ?

We will show you the most basic Simulations of the Development of a Trading Account

Scenario 1: Risking XY% per Trade

Scenario 2: No Money Management

If you suffer a streak of five losing trades in a row, your capital will be reduced as follows: demos

We will talk about the basic and important rules of money management , we will explain what Winrate is , Risk to Reward ratio and how to influence them to your advantage. (Depending on changing winrate and risk-to-reward ratio , but also the order of wins and losses and the size of the invested % of the size of the remaining bank, the overall performance / account status also changes . How and in what way – we will talk about this in other articles, where we will also show simulations of different scenarios (dozens of computer simulations with different winrates , different orders of wins and losses, sizes of wins and losses, different rr ratios , but first it is necessary to understand the basics and the basic mathematics of risk/money management )

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