Forex Money Management Technique

In applying a good money management generally there are some money management techniques are often used by traders and proven can provide traders with the ability to maintain profit of the capital even double it many times no matter the trading account get loss but by using such techniques can restoring all of lost funds even be able to make a Trade profit . Here are some money management techniques commonly used are the following below :

1 . Martingale

Martingale is a strategy by doubling the number of lots from  the previous lot with the aim to restore losses quickly through the multiplication of lot . Although this technique can make you restore the loss of your funds quickly but this martingale technique has a negative side on the use of lot . When double the trading lot  automatically risk of will be greaterthan before . That will sound good if we could win the order with the position that touches the Take Profit point but what if Our Order touched the Stop Loss then we will lose more . You can see an illustration of the techniqueusage here : Martingale Technique

2 . Switching

Switching is a trading technique by changing direction when loss experienced in trader order with the assumption that the market trend has changed and not walked in accordance with the analysis of the trader . For example a trader making analysis and see the shooting star pattern then he take the conclusion that the trend will going down and try to take the opportunity to short . But after a few hours then the price does not touch on the take profit even as if the market would be rise by making  the hanging man pattern . Then at that time thetraders will take the initiative to change the order from Short becomes long for anticipated losses . As shown in the image below :

Switching

It is seen that after the price does not touch a take profit but instead gives signs that the trend will change , the trader can take the initiative to change the direction of the short order turn out to be long so it can be in minimizing losses or even be turned into profit .

3 . Cut Loss

Cut loss technique is usually used by a trader who rarely put a stop loss on any orders due to the assumption that the stop loss just makes the loss comes faster . Cut loss is done by closing the order that was made with the assumption that if it not closed immediately the order will cause greater losses . This technique is often used by beginner traders because of lack of understanding the importance using stop loss in money management .

4 . Averaging

Averaging is a money management technique by performing repeated orders despite previous order has been closing in stop loss hitted in hope that the market will change direction in accordance with the wishes of the trader . In using averaging techniques are needed high caution in using this technique because the trader will fight against the trend in the market so that the arrangements with a small risk and consistent is necessary and wait from making order until the price reaching in  next saturation point so it is likely not possibleto continue the trend and change of trends will often occur at the saturation point.

Averaging

5 . Hedging

Hedging is open two positions simultaneously but with different directions . When doing this technique strength of our margins will remain closed until one order . Hedging techniques will make one of the orders we experienced of profit and the other experienced in loss so we need to be careful when closing one of them, loss or profit order I mean to avoid mistakes because we closing one order in the wrong time when the trend still not changing.

Thus articles on money management in trading techniques that I can give to you and hopefully this article can be useful .