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3 Money Management Tips for Day Trading

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Trading is a market in which you can earn money. But if you make any mistakes, you will lose money instantly. It is a market where you will always lose some money and it is quite natural to do so. In a place like the trading market, losing money is quite natural. When you make any mistake then the chances of you losing your money become higher. Trading is a risky profession where you take risk and therefore you need to understand the importance of money management in this industry. When you join this industry, you must need to fix a certain amount of money from your trading capital which you are ready to lose. Without following a money management rue a trader with an 80% win rate can lose all of his trading capital just by losing 20% of his trades. On the other hand, a trader with a 60% win rate can make a big profit just by maintaining proper money management.  

Work on Your Stop Loss

A trader can have the best trading strategy in the world. But without any stop loss for the trades, a trader is just gambling in the trading market. So once you invest money in trading then you must fix a risk-reward ratio and you need to fix your stop loss level according to that. By using a positive risk-reward ratio if you win some trade, you can increase the risk of each trade and almost every day you will find look like so sure that you will earn sure cash from that. So you feel like going all-in without any stop loss and in this case, you can be sure that you are going to lose money. So by winning trades with a proper risk-reward ratio will help you to take more risk and if you lose a few trades, you need to lower your risk level. This is how you can work on your stop-loss level in times of continuous winning or losing.

 Fixing a Risk-Reward Ratio

The trading industry is a place where if you can stay alive, you will be able to earn money from it. Here, staying alive means you can keep your trading balance alive because in this market without risking money you cannot earn money. So if you don’t want to lose money, you need to follow a positive risk-reward ratio while trading. If you maintain a risk-reward ratio of 1:2 or 1:3, it will be quite impossible for you to blow your account balance. So, whenever you find a position, you can set the stop loss and take profit level according to your fixed risk-reward ratio. If you can set the stop loss and take profit level according to your risk-reward ratio only, you should open that position, otherwise you should leave that position. People in the Mena region who are taking trades with Saxo bank group, always focus on a high risk to reward ratio. It allows them to earn more in the most complex state of the trading market.

Take a Break

When you are a trader you must need to have a clear mind while you are trading and trading with a bad mind and mental condition can lead you to some uncertain result. There will be a time like when you are in a losing streak no matter how alert you are when you were making a trading decision. So in this type of situation, you need to take a break from trading because losing a few trades continuously can harm your confidence level and mindset. Taking a break will help you work on yourself and regain your confidence. It is also a good way of managing your money. 

So we hope if you are in the trading industry and follow proper money management rules you will succeed. If you still don’t have a money management plan, this article will help you to create one.

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