Deposit Management and Capital Management - Page 101
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Thread: Deposit Management and Capital Management

  1. #1
    Trader rinaji's Avatar
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    Deposit Management and Capital Management

    Today I made ​​a light topic to discuss, about trade using a stop loss or cut loss. We have too much discussion about the importance of stop loss and risk management, it is 100% true, we must agree that the stop loss and risk management is essential to minimize the risk.

    Do you agree with this...

    No Stop Loss = No Risk Management?

    It is a simple and easy question to answer, maybe we will find many traders who agree with the above sentence.

    But ...., should not be so, money management is not only for the balance in the account, but for all of our capital, (on the account, in payment processor, in the Bank, or in your pocket, and others). At its core is the management of all of your capital.

    I've been trading with risking 100% of deposits, but I have a risk management, yes of course.

    Suppose I have a $ 1,000 capital.
    I have a trade plan with a maximum risk of 10% (of the total capital) per trade. That means I take $ 100 risk for each trade position.

    Well, in general, we will use this way ....
    We made ​​a $ 1,000 deposit. We use a stop loss or cut losses when equity was reduced by $ 100 or 10%. It is a common way. And other people will think that we are really good in applying risk management. Of course...

    So what if we do this way ...
    We split our capital into 10 deposit @ $100. We made ​​a $ 100 deposit, the remainder ($ 900) is stored in the payment processor, or bank, or our pockets. And we do the trade without a stop loss / cut loss. If we get stopped out, then we make a new deposit ($ 100), and so on.
    Perhaps some people may believe we are risking 100%, yes we understand them, because they only see from the management of deposits, not capital management.

    Conclusion: Do not think that risking 100% deposit is mean without risk management. So if you see me getting stop out (usually I trade without a stop loss), you do not think that I am risking 100% of capital. I am only risking 100% of deposits. This could mean only risking 10% of my capital, or 5% capital, because I always split the deposits into multiple parts.

    Another example:
    Suppose I have $ 1,000. and I split into 10 deposits @ $ 100. Well, if I set 10% risk (of the initial balance) per trade. Or $ 10 per trade. This means that we set 1% risk (of total capital) per trade. Equivalent to $ 10.
    10% risk of initial balance ($ 100) = 10% * $ 100 = $ 10. This is if we calculate in deposit management.
    1% risk of total capital ($ 1,000) = 1% * $ 1,000 = $ 10. This is if we calculate in capital management.

    It is a simple way to understand capital management, maybe I'll make a topic about cash flow management in the other thread. I think we should actually do forex trading as a professional business, not just about market analysis.

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    If you lose, be patient. If you win, stay humble

  2. #1001
    Trader Senorita's Avatar
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    Learning to manage our investment is very important and we should understand this and follow due process to improve. In forex the opportunity to gain much more is here and if we must make good income, we have to plans well and we have to ensure we develop our skills in a good and profitable way. Success is achievable and only when we manage our capital that we can actually have the ability to survive and make better and successful trading.

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  3. #1002
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    You shouldn't deposit more than what you can afford to lose, forex trading is a risky business anything can happen, so don't deposit more than what you can afford to lose in this trade, always deposit what you can afford to lose in the market so that even if you lose you won't regret it.

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  4. #1003
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    Quote Originally Posted by Kelv View Post
    You shouldn't deposit more than what you can afford to lose, forex trading is a risky business anything can happen, so don't deposit more than what you can afford to lose in this trade, always deposit what you can afford to lose in the market so that even if you lose you won't regret it.
    You are very correct sir, this is the actually rule of the trading, and if any traders try to ignore it, they will meet the issue in the future, because there is no way such trader will think straight, they will only be loosing money in the market under emotion. Trading has to be done accordingly, and the mind of the trader has to be well tamed.

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  5. #1004
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    Deposit management is an important aspect that should be consider while we are trying to make a deposit into our trading account, the forex market is highly risky business no amount is too big to be lost, we can lose any amount of money in the forex market, so we need to make sure that we deposit what we can afford to lose in the market.

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  6. #1005
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    Quote Originally Posted by davido View Post
    Deposit management is an important aspect that should be consider while we are trying to make a deposit into our trading account, the forex market is highly risky business no amount is too big to be lost, we can lose any amount of money in the forex market, so we need to make sure that we deposit what we can afford to lose in the market.
    Good traders understands that they only make success when they improve better in this business. You must manage your capital in a good way so that you can have the means to still trade and make profits from forex. Every trader should start up building great plans to succeed in this business and know why they must manage their risk so they can be able to succeed and make quality earnings.

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  7. #1006
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    Before you deposits money in forex trade, you should think of deposits management, of course this is a business that is highly risky, so you should consider how much you want to invest and how much you are willing to let go if loss come, because in a business you don't only thing about advantage alone, consider both advantage and disadvantage. Deposits management is really important for you to do.

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  8. #1007
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    Quote Originally Posted by SuccessfulKartik View Post
    I think deposit and money management are one and the same, which implies proper diversification of our investments into different avenues. We must set our risk management rules and follow it with discipline. So I think being disciplined in trading is the best means to minimize risk and losses. Experience teach us discipline and profitable trading. When I was still a newbie in forex market investing large amount and trading gave me lot of loss.
    Deposit money will be needed as a trader but we trully will need a good calculation in doing that. Traders that have been disciplined will know where they can trade and how they should think about the risk and calculate how big they will be trading. If we do not know anything about managing the money, trading will be rather dangerous indeed.

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  9. #1008
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    A trader must have to deposit the such amount of money which he or she can handle so goodly. Rest of the money must be kept for backup in the forex trading. Because in forex market we should never deposit all our money because there could be chances of getting indulge into greed and we may lose our money.

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  10. #1009
    Trader YoyO_o's Avatar
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    Yes, money management is an important thing when you will trade in forex market. If you want to make money, you have to keep secure your capital first. And a good strategy and a perfect management can help you keeping your money safe.

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  11. #1010
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    [lang=ar]good thread my friend , that is very good idea , the risk management is very important , and you should take care of your risk in order to make money and taking care of the risk of all your capital is good idea , you also have to withdrawal money from time to time and keep this money safe like 100$ of every 400$ you make in your account to keep this money safe and reduce your own risk till it is zero risk after you withdawad all your capital[/lang]

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