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What is money management? Is it martingale?

  • #21
  • Jan 31, 2019 5:13am Jan 31, 2019 5:13am
Quoting chineser
people say "to make money The key points are money management and discipline", i wonder what is money management? is it martingale? you cant predict the future price. so when should you add your position ? how did you know you wont fail?
Martingale in simple terms means you double your stake after every loss, until you have a winning trade. So this is more about hypothetical money pump and it has little to do with wise money management.

Basically, the rule of thumb you should apply in your money management approach is to risk fixed % of your deposit per trade. Take for example 1%. Basically with growth of your equity, absolute amount of money (1% from equity) should increase and in absolute terms your bets are growing. But we are more concerned about relative stability because this is how you can achieve constant risk per trade expressed in money and reduce volatility of your returns.
  • #22
  • Feb 1, 2019 12:32am Feb 1, 2019 12:32am
You are absolutely right! The first goal to any trader is to become consistently profitable. It doesn`t matter how much the trader earned to day, the more important is to be able to generate profits in the long-term perspective. Only after achiveing this trader could think about the increasing of the size.

So, the money mangement is a complex of methods allowing to control risks and distribute risks among different strategies.

Martingale is so popular among retail trader just because it allows to avoid painful decisions to close wrong positions. Of course, sometimes it can help to close the position with the small loss, at the breakeven, or, sometimes, even with profit, but than, at once, the loss would be huge.
  • #23
  • Feb 8, 2019 1:16am Feb 8, 2019 1:16am
I agree with all of the above said. We could loose big amount with martingale, and it would be even more painful than, trading wisely and still have some not profitable positions.
  • #24
  • Feb 8, 2019 6:02am Feb 8, 2019 6:02am
Martingale = gambling without an edge = financial ruin
  • #25
  • Feb 15, 2019 1:16am Feb 15, 2019 1:16am
Quoting Treeny
Martingale = gambling without an edge = financial ruin
LOL, Well said Treeny.
  • #26
  • Feb 22, 2019 8:25pm Feb 22, 2019 8:25pm
Money Management in forex is one of the important factor for consistent profit. Due to its volatility, the Forex market is inherently risky.
  • #27
  • Feb 23, 2019 8:23am Feb 23, 2019 8:23am
Quoting Butterscotch
Money Management in forex is one of the important factor for consistent profit. Due to its volatility, the Forex market is inherently risky.
Of course; it’s very much important! In addition, which traders don’t follow the rules of MM they face huge damage in their trading.
  • #28
  • Mar 18, 2019 10:58am Mar 18, 2019 10:58am
Quoting Butterscotch
Money Management in forex is one of the important factor for consistent profit. Due to its volatility, the Forex market is inherently risky.
managing money is important i admit , but i don't know what actually consistence profit , because i have never seen a guys who got profit consistency from this market place , according to me, profit in Forex is just a temporary session.
  • #29
  • Last Post: Mar 18, 2019 11:10am Mar 18, 2019 11:10am
Quoting BenDunk
{quote} managing money is important i admit , but i don't know what actually consistence profit , because i have never seen a guys who got profit consistency from this market place , according to me, profit in Forex is just a temporary session.
That's because over 90% fail due to focusing only on technical strategies that take no account of what's actually going on in the market. Couple that with static self imposed expectations of stops and targets and you get a 90% loser. Sometimes they can last a short period when markets are trending and its easy to make money but as soon as the fundamentals change they end up blowing up.
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