Understanding Money Management In Investment and Stock Trading

Rancakmedia.com – Do you understand the meaning of money management? Take advantage of this opportunity to invest in stocks. Since the beginning of the year the Composite Stock Price Index (IHSG) has still fallen 21.68 percent. This is an opportunity to hunt for well-funded stocks that are dropping in price.

Since the beginning of the year, the Composite Stock Price Index (IHSG) has fallen 21.68 percent. This is an opportunity to hunt for stocks with a strong base that are dropping in price.

If you don't know how to manage money in stock investment, try Money Management in EMTrade style. There are many things that must be considered in Money Management.

  1. First, separate your trading portfolio from your investment portfolio. Investment and trading capital must also be regulated separately.
  2. Second, share 80 percent of the investment money. 2020 is the year of investment! Take advantage of this unique opportunity. Allocate 20% of trading money.
  3. Third, buy a maximum of 5 shares for investment. You don't need to buy a lot of stock. Create a payment plan for purchases. Divide in some of your capital purchases.
  4. Fourth, don't rush for quick profits and don't be pushy when trading. Remember, there is a negative trend in the market situation. Start small for beginners. Just buy a maximum of 10 shares. Don't be crazy to buy all the shares.
  5. Next, don't forget the concept of short-term losses and let the profits continue. Limit the hazard as soon as possible and maintain a strong rising stock.

Suppose you have an initial capital of IDR 100 million. For investment and trading capital. Thus you will have an investment capital of IDR 80 million (80 percent of the total capital). Only five shares are invested. This means you have a capital of IDR 16 million per share.

Assume that this year, between September and December, you will make 4 additional installments. That is, you can buy shares at a price of Rp. Installments of 4 million every month.

You of course have to choose stocks with very good investment fundamentals. EMtrade offers 12 investment reference stocks: BBCA, BBRI, BBNI, BMRI, ICBP, INDF, HMSP, GGRM, UNVR, KLBF, TLKM, ASII.

We chose five investment stocks, BBCA, BBRI, ICBP, HMSP and ASII, for example. Check out the illustration of stock investment purchased in installments below!

understanding of money management

From this illustration, the number of lots for installment purchases varies each month, because the share price also changes. The purchase price of each share is less than IDR 4 million.

Continuing the scenario above, you will have a trading capital of IDR 20 million. It is possible to trade in 10 shares. Thus you can buy an average of a maximum of IDR 2 million per share.

To control risk when trading, you must stop losing. For example, you limit your loss to a maximum of ten percent to a maximum of two million rupiah in shares, which means a maximum loss of IDR 200,000.

If the termination level breaks, losses must be reduced. You can also try to keep your capital loss under 10%. On a percentage basis, the loss per share is less than 1 percent relative to total capital.

For example, if you are ready to risk 10% of the total capital from the start, that means you are ready to lose IDR 2 million. Do the math, this is the cost of learning to trade.

IDR 2 million is the maximum portfolio loss limit. If you lose IDR 200,000 on each trade, then you have 10 times the opportunity to minimize risk.

Cut loss is something you have to deal with. Make this a study time to improve your thinking, trading and investing skills.

FAQs

Below is a question and answer session from the article that we have presented above.

What is the definition of money management

Okay, let's start with the concept of money management: according to (Chen, 2021), money management refers to the process of budgeting, saving, investing, spending, or monitoring the use of individual or group capital.

Why is Money Management Important?

Money management is very important, especially if you want to invest your money with the right publishers. Apart from evaluating the technical and fundamental aspects of a stock, the most experienced investors also incorporate proper money management.

What is Psychology in Trading?

Trading psychology basically refers to the mental and emotional state of a person while trading. Among them are the mindset, character and behavior of investors when trading, which helps determine the success or failure of trading activities.

Conclusion

Since the beginning of the year, the Jakarta Composite Index (CSPI) has fallen 21.68 percent. This is an opportunity to hunt for well-funded stocks that are dropping in price. If you don't know how to manage your money in stock investing, try EMTrade style money management.

Imagine you have a trading capital of IDR 20 million. It is possible to trade 10 shares at an average of IDR 2 million per share.

To control risk when trading, you must stop losing. If you lose IDR 200,000 on each trade, then you have 10 times the opportunity to minimize risk.

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