WEALTHPOWER INSTRUCTIONS
-: Wealth Risk Management :-
It Is Necessary To Adhere To Simple Risk Management Rules To Protect Ourselves. We Can Only Control Ourselves ,We Cannot Control
The Behavoiur Of The Market.It Is Absolutely Essential To Have The Brakes Applied With Proper Risk Control.
The Suggested Risk Control Is Though Left To Individual Trader Based On His/Her Experience,Novice Trader Requires
To Adhere To Simple Risk Of 0.33% Of Trading Capital Employed At Each Trade.This Can Be Illustrated As Under:
Initial Capital 10000
Risk Capital 0.33%=10000*0.33/100=33
This Risk Capital Is The Capital At Risk I.E STOP LOSS ABSOLUTE AMOUNT That A Trader Can Put To Risk.
For E.G If The Price Of The Instrument Is 100
Stop Loss 98
Risk Per Unit Is 100-98=2
Trading CAPITAL AT THE TIME OF TRADE 10000
Risk Capital 0.33%=10000*0.33/100=33
No Of Units To Be Bought=33/2=16(Approx)I.E Risk Capital/Risk Per Unit
Note: Capital Will Change At Every Trade. If Above Trade Delivers A Profit Of 5, THEN THE SCENARIO OF NEXT Risk Capital Will Be As Under:
No Of Units Bought=16
Profit Per Unit=5
Total Profit=16*5=80
New Capital=10000+80=10080
Here New Capital For Trade Is 10080.
The Risk Capital For New Trade Will Be 10080*0.33/100=33.264
If The Trade Does Not Turn Profitable, Then Scenario Will Be As Under:
Trading Capital=10000
Trade Price=100
Stop Loss=98
Loss=100-98=2 Per Unit
Total Loss=16*2=32
New Capital=10000-32=9968
New Capital At Risk Will Be 9968*0.33/100=32.89
Now This Amount OF 32.89 Is The Absolute Stop Loss Amount That A TRADER CAN PUT TO RISK.
In This Scenario, New Capital At Trade Will Change With Every Trade There By Reducing The Chances Of Unlimited Losses.
This Way A Trader Will Be In The Market For A Very Long Period Of Time And Will Have Improved Chances Of Great Learning Curve.
A Trader May Devise His /Her Own Risk Management Rules With Experience And Optimise The Same For Increasing Profit Potential.
Assumptions Of The Above Document :
1)STOP ORDERS Have To Be FILLED.
Limitations Of Above Document:
1)Sometimes Market Conditions Make It Difficult For Stop Orders To Be Filled And Our Trading Losses Can Be More Than Planned
STOP ORDER Losses. It Is A Hard Reality Of Any Financial Market Trading And Have To Be Fully Absorbed By Us.All The Same,
Experience Is The Best Teacher And Market Is The Best Guru.
RISK DISCLOSURE:
Futures And Forex Trading Contains Substantial Risk And Is Not For Every Investor.
An Investor Could Potentially Lose All Or More Than The Initial Investment. Risk Capital Is Money That Can
Be Lost Without Jeopardizing Ones' Financial Security Or Life Style. Only Risk Capital Should Be Used For
Trading And Only Those With Sufficient Risk Capital Should Consider Trading. Past Performance Is Not Necessarily
Indicative Of Future Results.
HYPOTHETICAL PERFORMANCE DISCLOSURE:
Hypothetical Performance Results Have Many Inherent Limitations, Some Of Which Are Described Below.
No Representation Is Being Made That Any Account Will Or Is Likely To Achieve Success Or Losses Similar To Those Shown;
In Fact, There Are Frequently Sharp Differences Between Hypothetical Performance Results And The Actual
Results Subsequently Achieved By Any Particular Trading Program. One Of The Limitations Of Hypothetical Performance
Results Is That They Are Generally Prepared With The Benefit Of Hindsight. In Addition, Hypothetical Trading Does Not
Involve Financial Risk, And No Hypothetical Trading Record Can Completely Account For The Impact Of Financial Risk Of
Actual Trading. For Example, The Ability To Withstand Losses Or To Adhere To A Particular Trading Program In Spite Of
Trading Losses Are Material Points Which Can Also Adversely Affect Actual Trading Results. There Are Numerous Other Factors
Related To The Markets In General Or To The Implementation Of Any Specific Trading Program Which Cannot Be Fully
Accounted For In The Preparation Of Hypothetical Performance Results And All Which Can Adversely Affect Trading Results.
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