Starting a forex business requires various preparations. Forex is a business that involves currencies that have good value in the market. Therefore, traders must be able to determine which currency is good to be an asset. In addition to assets, traders must also be able to perform analysis so that the prediction of the movement of the assets they own can be known before opening a position.

One of the important things to do but tends to be often forgotten by traders is managing finances or what is more commonly referred to as Forex Trading Financial Management. Financial management is very vital in the world of trading. A trader who trades without having good financial management is tantamount to gambling.

Remember, trading is done to do business for profit, not gambling. Gambling will only make a profit if the player is lucky. However, trading profits can be estimated by conducting financial analysis and management.

Financial Management in Forex

Financial management is one of the efforts to protect the account you have. The way financial management works is to protect accounts by managing risk. Before entering into forex trading you must determine what percentage of the maximum asset risk of the assets you have. This is what sometimes makes financial management in forex also called capital management. Capital management is the process of placing capital in the present as well as capital planning for the future.

Over time the process of placing capital management will experience many evolutions and variations. This is where the various types of capital management eventually emerge. Here is some capital management that you can use.

Financial Management in Forex – Martingale Model Model

Martingale is capital management whose probability allows for similarity in value to what has happened before due to the multiplication principle. This method was first popularized by Paul P. Levy in the 18th century which is also one of the betting methods in France.

Martingale is defined as a process to gain profit and simultaneously be able to cover losses from previous transactions through the doubling of capital. So that if at any time capital management decreases, the size of the next transaction will automatically increase.

Financial Management in Forex – Anti-Martingale Model

From the name, this method is opposite to Martingale. In addition to the name, the system of this method is also different, namely not doubling the position when experiencing a loss. The risk of this capital management will increase along with the increase in profits. Addition only occurs if the position is profitable so that the goal of increasing profits can be achieved.

Financial Management in Forex – Cost Averaging

This method is similar to the Martingale because both focus on adding positions when the previous transaction suffered a loss. Broadly speaking, this method is to add to a losing position.

Financial Management in Forex – Pyramiding

This model is the opposite of the Cost Averaging method, which is to increase when you are in a profit position. Pyramiding has logic if the market moves as expected then it could be when the trend is happening. Additional positions also need to be made in the hope that it will continue in the direction of the trend.

Financial Management in Forex – Fixed Fractional Position Sizing

This capital management is most recommended by professional traders. It could even be that you have been using this method for a long time. Simply put, this capital management will determine the size of a fixed position based on a certain percentage of capital management from the amount of existing capital.

Thus the discussion about Forex Trade Financial Management, I hope this article is useful.