Gold Money Management System PDF
How to Calculate Risk Management XAUUSD Trading
In any business, in order to make a xauusd profit one must learn how to manage the risks. To make xauusd profits in xauusd you need to learn about the various xauusd money management strategies described on this learning xauusd lesson site.
In gold, the risks to be managed are potential xauusd losses. Using xauusd risk management rules won't only protect your account but also make you profitable in long run.
What is DrawDown in Gold Trading?
As traders the number one risk in xauusd is referred to as draw down - this is the sum of money you have lost in your account on one trade.
If you have $10,000 capital & you make a xauusd loss in a single trade of $500, then your gold drawdown is $500 divided by $10,000 which is 5 percent gold draw down.
What's Maximum Gold DrawDown?
This is the total amount of money you've lost in your account before you start making profitable trades. For example, if you have $10,000 in xauusd capital and make 5 consecutive losing trade transactions with a total of $1,500 loss before making 10 winning trade transactions with a total of $4,000 profit. Then the trading maximum drawdown is $1,500 divided by $10,000, which is 15% maximum draw down.
Gold DrawDown is $442.82 (4.40%)
Maximum Gold DrawDown is $1,499.39 (13.56 percent)
To learn how to generate the above in xauusd reports using MetaTrader 4 software: Generate XAUUSD Reports in MT4 Tutorial - Gold Equity Management System PDF - Risk Management Excel Spreadsheet
How to Calculate Risk Management Trading
The in example illustrated and shown below shows the contrast between risking a small percentage of your xauusd capital compared to risking a higher percent. Good How to Calculate Risk Management XAUUSD principles requires you as a trader not to risk more than 2 % of your total xauusd account equity on any one single trade.
XAUUSD Percent Risk Method
2 percent & 10 percent Equity Management Rule
There is a large difference between risking 2 % of your xauusd account equity compared to risking 10% of your equity on a single trade.
If you happened to go through a losing gold trading streak and lost only 20 trade transactions in a row, you would have gone from beginning account equity balance of $50,000 to only having $6,750 left in your account if you risked 10 % on each trade. You would have lost over 87.50 % of your trading account equity.
However, if you risked only 2% you would have still had $34,055 in your account which is only a 32 % loss of your total xauusd account equity. This is why it's best to use 2 % risk management strategy in trading xauusd.
Difference between risking 2 % & 10 % on a single trade is that if you risked 2 % you would still have $34,055 in your trading account after 20 losing trades.
However, if you risked 10 % you would only have $32,805 in your account after only 5 losing trade transactions that's less than what you would have in your account if you risked only 2 % of your trading account and lost all 20 xauusd trades.
The point is that you want to setup your How to Calculate Risk Management XAUUSD rules so that when you do have a xauusd loss making period, you'll still have enough in xauusd capital to trade the next time.
If you lost 87.50 % of your in xauusd capital you would have to make 640% profit to go back to break even.
As compared to when if you lost 32 percent of your in xauusd capital you'd have to make 47% profit to get back to the breakeven. To compare it with the example 47 % is much easier to break even than 640% is.
The chart below shows what percentage you'd have to make so that as a trader you can get back to breakeven if you were to lose a certain percentage of your in xauusd capital.
Concept of Break-Even - Gold Equity Management System Tutorial
Account Equity & Break Even - Equity Management Strategies - Gold Equity Management System Tutorial
At 50% xauusd drawdown, a trader would have to earn 100 % on their invested xauusd capital - a feat accomplished by less than 5% of all xauusd traders world-wide - just to breakeven on a account with a 50% loss.
At 80% draw down, a trader must quadruple their gold equity just to bring it back to its original equity. This is what's known as to "break-even" - which means - get back to your original xauusd account equity balance that you started with.
The more money you lose, the harder it is to make it back to your original gold account size.
This is why as a trader you should do everything you can to PROTECT your trading account equity. Do not accept to lose more than 2 % of your account equity on any one single trade.
XAUUSD Equity Management is about only risking a small % of your capital in each trade so that you can survive your losing streaks and avoid a large drawdown on your account.
In trading xauusd, traders use xauusd stop xauusd loss orders which are put in order to minimize xauusd losses. Controlling risks in xauusd involves putting a xauusd stop xauusd loss order after placing an new trade order.
Effective XAUUSD Money Management
Effective in xauusd risk management requires mitigating all the risks in gold trading and a trader should create a equity management system & a equity management in xauusd plan. To be in xauusd or in any other business you must make some decisions involving some risk. All in xauusd factors should be analyzed to keep risk to a minimum & use above xauusd equity management tips on this tutorial - Gold Money Management System PDF.
Ask yourself? Some Gold Tips
1. Can the risks to your in xauusd activities be identified, what forms do they take? and are these clearly understood and planned for in your in xauusd plan? All the risks should be taken care of in your in xauusd plan.
2. Do you grade the risks encountered by you when in xauusd in a structured way? - Do you have a money management xauusd strategy & a in xauusd plan? have you read about this learning in xauusd tutorial which is well covered explained here on this learn xauusd web site for beginner traders.
3. Do you know the max potential risk of each exposure for each trade which you place?
4. Are trading decisions made on the basis of reliable & timely market information and based on in xauusd strategy or not? Have you read about in trading xauusd systems on this learning xauusd web site.
5. Are the risks big in relation to trade turnover of your invested xauusd capital & what impact could they have on your xauusd profits margins & your account margin requirements?
6. Over what time periods do the in xauusd risks of your in xauusd activities exist? - Do you hold in xauusd trade transactions long term or short term? what type of gold trader are you?
7. Are the exposures in trading a one-off or they're recurring?
8. Do you know enough about methods in which xauusd risks can be reduced or hedged and what it would cost in terms of xauusd profit if you didn't include these measures to reduce potential xauusd loss, and what impact it would make to any upside of your gold profit?
9. Have your xauusd money management rules been addressed adequately, so as to ensure that you make & keep your in xauusd profits.
XAUUSD Money Management and Equity Management Strategies - Draw Down XAUUSD Equity Management Chart - Draw Down XAUUSD Equity Management Calculator
