Martingale And Other Money Management Styles For Traders

Traders have worked out different ways of managing their money. The majority of these systems are based on various statistical probability theories. The main task of management system is never put all your money at risk or you may loose everything on a single trade. And it doesn’t sound good.

It is a tricky thing to calculate position size under the various money management systems. You understand the concept. Money management calculators are included in the set of the trading software. We shall discuss the most commonly used money management style of traders.
You should bear in mind that the stock trading could need various money management style. So you need to realize the concept as a trader. The basic system is the Fixed Fractional Money Management System. It overtakes that you may set proportion of your trading account between 2% to 10%. You would trade larger percentage of your money and have less risk. This system is widely used by traders. The Fixed Ratio Money Management System is for trading options and futures. Of course, you master that formula.
The Martingale System is another money management system. It has roots in casinos and speculation. But traders use it in trading with pleasure. You start with a fixed amount of money, for example, $3,000. If you have a successful trade, you would trade another $3,000. but if your trade is not profitable, you double to $6,000 and you will keep on doubling until you will be a winner. You may be heard about Doubling Down in a Casino. Well it almost the same in the Martingale system. You will continue until your money end. But the problem is that you may lose all your money without winning.