We are confident that newcomers to the forex market are not accustomed to trading, but we are definitely on a topic to learn. Profit and loss management in Forex is an experience that traders have been trading for a certain period of time. However, especially the main part of this issue needs to be known by new investors. The leverage ratio used in the Forex market ensures that inexperienced investors can not manage profit and loss ratios and can not calculate them clearly.
The profit and loss management which is valid in all investment instruments and markets is one of the main elements that enable you to reach maximum transaction volume with your capital on the market. This management is more important in the forex market where a high rate of leverage is traded with instant data.
Forex has many external and internal factors to influence the markets. Unexpected movements lead to a change in the direction of the wind in the market; Money management and analysis to the point of consuming the capital of those who have not done well.
Certainly; The first duty and desire of investors in the forex market as in every market; The damage is to keep the minimum level. The most known and basic method of calculating profit and loss in the market is; Is the ratio of total open positions to capital. If the sum of the open positions of an investor approaches the main capital, it is absolutely necessary to earn the profit in these positions. Here is the key to success at this point is entering psychology. Because the only thing that comes to mind for an investor who has opened positions with a large portion of his capital is to get absolute profits from those positions. Any possible fluctuations in this psychological posture will seriously affect the investor and allow him to stop and open positions wherever he is not at all.
WARNING: When opening a new position in the Forex market and issuing an order to stop the open position; You must be both Turkish and English!
How can Be a Turk or an English?
A Turk decides very fast, starts practicing immediately, gives up quickly.
A British decides too late but never gives up on his decision.
Here’s what you need to do to open successful positions; It is the Turkish decision-making ability and the British’s commitment to not giving up. First, you have to believe in the position and you have to continue your process before giving up. Here profit and loss management goes into effect. The Forex market has an equation that many analysts and experts believe.
WARNING: Never open position sum, do not exceed 10% of your capital!
We certainly believe this general opinion. This is one of the most important mistakes we have ever seen. The capital ratio of open positions of persons is 60% – 70%. The investor who does not want to experience such a big loss of capital expects absolute profits from the current open positions; It means that it can not decide right on the spot.
How to Calculate Profit-Loss in Forex Market?
This is best explained as follows. Let’s imagine that you have a single position at 60% of your current capital. When you earn your position, you can increase your capital by 160%. However, profit-loss management on the forex market is never done based on the likely amount of gain. For this reason, it is useful to examine the damage situation. If you are in positional damage, 40% of your capital will remain in your hand. And for you to reach your old capital; You will have to earn a lot of new positions. That is why; It is straightforward to open a position with a maximum of 10% of the capital. Because in the case of losing, 90% of your capital will stay and you will only have to make an 11% gain to regain your lost odds. (Relative to leverage ratio of 1: 100).
Profit – Loss management is most often implemented incorrectly by newcomers to the forex market, making new investors fully engaged in emotional transactions. New investors should not give importance to instinctual feelings such as ambition, victory, fear, losing, winning, etc. Because these sentiments will put investors away from the rationality line and into an irrational structure. Profit and loss management and calculation processes that must be applied to the above forex market; You must do it against your own capital before opening the position. Then, when you start processing, you should be loyal to what you initially received instead of constantly making a decision.