Teach you a few ways to manage your finances well

1. Overall risk measurement of the capital account

When investors engage in foreign exchange investment, they must first determine the amount of funds they can use and the maximum loss they can bear in foreign exchange investment according to their financial strength and psychological tolerance. For retail investors, the cash used in each transaction should not exceed half, and for medium and large investors, the cash used in multiple transactions should not exceed 10% -15% of the total amount of funds, which means that there are always enough reserve funds at any time to ensure temporary disbursement in case of unsuccessful transactions.

The maximum loss per trade must be limited to 10% of the total capital. This 10% refers to the maximum loss that the trader will bear in the event of a trade failure. This is an extremely important starting point for deciding how many contracts we should trade and where to place our stop-loss orders.

In addition, we should also pay attention to spreading risks. in a singleforeign exchange marketThe amount of capital invested in the foreign exchange market should be limited to 30% to 45% of the total capital; in any market group, the total amount of margin invested should be limited to 20% to 25% of the total capital; in the relevant commodity foreign exchange market, the amount of capital invested should be limited to 60% of the total capital.

These measures can prevent traders from getting too much principal in one type of market, leading to poor liquidity or missing out on better investment opportunities, while also maintaining liquidity.

2. Measure the ratio of reward to risk

The general rule of the foreign exchange market is that the number of losses is far more than the number of profits. The margin system of the foreign exchange market makes the foreign exchange market extremely sensitive. Even if the market moves only a little in an unfavorable direction, traders have to bear the pain of position squaring. Therefore, before traders really capture the market movement in their hearts, they have to make several exploratory attempts.

In the foreign exchange market, most trades are in deficit, so the trader's only hope is to ensure that the profit of the profitable trade exceeds the loss of the losing trade. To achieve this goal, it is necessary to measure the ratio of reward to risk. In practice, for each planned trade, we should determine its profit target (compensation), and the amount that may be lost in the event of failure (risk).

We weigh profit targets against potential losses to arrive at a ratio of reward to risk, the common standard of which is 3:1. According to this ratio, when we consider a trade, the profit potential needs to be at least three times higher than the possible loss before we can implement it.

In addition, the probability factor should be added to the calculation of the ratio of reward to risk. Because only estimating profit and loss targets is often inaccurate, and there are many factors that affect their changes, the estimated potential profitability and loss should be multiplied by the probability of the above profits and losses respectively.

"Let profits grow sufficiently and limit losses to small amounts" is a cliché in foreign exchange trading. In foreign exchange trading, if we can stick to the long-term trend, we can achieve huge profits, but this requires a long-term perspective of grasping the cycle and waiting patiently, because such opportunities are only a few times a year.

3. Make the right mix of investments

In foreign exchange trading, the purpose of portfolio matching is to diversify risks. Portfolio matching is a science, and we can't go all out, as the risk is too high; but we can't spread the investment evenly across multiple projects, because the average use of troops often costs people and money.

The so-called "hit the right to hit the hard" traders often have several key investment goals, as the maximum possible point of their own profits - the backbone, and then set up a few points to diversify their investments - auxiliary forces to prevent risks.

We can take the method of compound position trading. Compound positions are divided into follow-up positions and trading positions. Follow-up positions are used to plan long-term goals, which requires setting long-term stop-loss orders for them to leave sufficient room for trade consolidation and adjustment. From a long-term perspective, these positions can bring the greatest profits, which is the so-called "backbone".

Trading positions are positions set aside in a portfolio for frequent outgoing and entering short-term trades. Their stop-loss orders are short and flexible, and their task is to detect risk and ensure long-term profits. The so-called "auxiliary force".

For example, if a market has reached a target, approaching a resistance zone, and the market is overbought, we can profit from the position squaring on the part of the trade position, or arrange a closer stop-loss order with the goal of locking in costs or ensuring profits. If the trend resumes later, we can also use the remaining trade position to make up for the position squaring.

4. Setting of protective stop loss orders

Stop-loss orders can be used to open new positions, to limit existing losses, or to protect the paper profits of existing positions. Stop-loss orders specify the execution price of the relevant trade order. Traders must set protective stop-loss orders for their open positions, which are completed through reverse position squaring orders. The setting of stop-loss orders is an art that needs to be grasped from both macro and micro aspects. On the macro level:

First, traders must conduct a comprehensive study of the technical factors on the price chart and the requirements for money management.

Second, traders should consider the volatility of the market. When the market is volatile, stop-loss orders should be set farther away; when the market is volatile, they should be set closer.

In terms of microscopic grasp:

First, buy stop orders are generally placed above the market, while sell orders are placed below the market (as opposed to the limit level).

Second, trailing stops can be established. For example, in the case of a long position, a protective stop-loss order for selling is placed below the market. If the price rises, we can also increase the level of the stop-loss order to protect the book profit. We can also arrange a stop-loss order above the current block level, and open a long position in time when a breakout occurs.

5. Grasp the management style of foreign exchange investment funds

In foreign exchange investing, success and failure are very normal things, and all investors will encounter them. The key is what we should do after success and failure? After failure, we are discouraged; after success, it is very common to chase after victory and increase the bet, but whether these practices are feasible and reasonable remains to be discussed.

Assume that you have lost 50% of your trading costs, so in order to recover your losses, you must earn back the remaining 50%. At this time, if you take a conservative approach, it will be difficult to make it back. On the contrary, you can only make bold bets, lose less, and earn more. If you have just made a profit and have made double the principal, how can you use the profit? At this time, if you use a bold trading method and double the trading position with profits, you may produce such a result - even the principal will be taken in, losing the husband and losing the army. Here we need to consider the issue of stop-winning.

Every trader's track record consists of a series of peaks and valleys. If the overall profit is on the rise, it is not advisable to immediately expand the market principal when the profit is just made, just as it is not advisable to buy when the market is overbought in an uptrend. It is wise to start increasing investment when the capital base is slightly losing money, increasing the opportunity for heavy investment; when the capital base is profitable, it is good to close it, and must not be too greedy.

Doing a good job of money management can be said to be half the battle in the foreign exchange market. As a successful foreign exchange investor in the United States said: The difficulty of foreign exchange investment is not the market strategy aspect of foreign exchange investment, because the way to enter and exit the market is not very different. The real change lies in the experience of the importance of money management.

Fund management is full of dilemmas and contradictions when it comes to foreign exchange investment, but its significance to successful people is extraordinary. We must fully recognize this. Master the principles of science, learn from the experience of others, and then combine your own style to form a set of fund management methods that suit you, in order to get everything you want.