Deposit Management and Capital Management - Page 103
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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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  2. #1021
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    When in the market we just limit the trades then it means we are just securing our trades in the forex market. So stop loss always play an important role in the field of risk management because without setting the stop loss we can never build our trading capital and we can never get success.

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  3. #1022
    Trader Sixteen's Avatar
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    Learning to manage our capital in forex will always be one of the best trading decisions for any trader. Good money management is truly important and there is no better means we can earn well in forex if we don't plan to manage our earnings in forex. We must therefore create a better system for us to develop much more and grow on the means to make steady earnings with forex. With the right risk management in our trade, we will of course succeed and would have better opportunity to make a good trade as we plan to become successful.

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  4. #1023
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    Quote Originally Posted by Sixteen View Post
    Learning to manage our capital in forex will always be one of the best trading decisions for any trader. Good money management is truly important and there is no better means we can earn well in forex if we don't plan to manage our earnings in forex. We must therefore create a better system for us to develop much more and grow on the means to make steady earnings with forex. With the right risk management in our trade, we will of course succeed and would have better opportunity to make a good trade as we plan to become successful.
    As long we can trully learn to manage our own capital then trading should not be difficult at all. Traders with a bad money management won't be able to survive for long in here. If we got no knowledge then trading will be very sucks and difficult. It is very important to learn more about the market carefully before we can make our decisions in here.

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  5. #1024
    Trader cutiekc's Avatar
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    The need for deposit management is making sure that we are putting into trading the amount of money that we can afford losing. Because when we should start trading and then trade with the amount of money that we can not afford losing, we end up making a whole lot of mistakes whereas losing our money and trading out of fear.

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  6. #1025
    Trader debian's Avatar
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    Quote Originally Posted by cutiekc View Post
    The need for deposit management is making sure that we are putting into trading the amount of money that we can afford losing. Because when we should start trading and then trade with the amount of money that we can not afford losing, we end up making a whole lot of mistakes whereas losing our money and trading out of fear.
    Yes and that is why between Deposit Management and Capital Management I think equally important and mutually reinforcing, so indeed we should apply both if we want to trade in conditions of low risk. If one or both do not we applied then it is certain that sooner or later we will have experience in failure from this business which loss all capital that was deposited , because in many times a beginner trader it is still unstable in using the lot size is not ideal

    Then if the risk has been controlled since the beginning, then its high possibiity the capital that was deposited can stay away from loss all balance as instant . I believe traders who often experience of failure in forex trading business because want to quickly gain big profits with a small capital of their deposit and trading with big lots without good deposit management and capital management . trading risk control is something that should be prioritized because the opportunity for profit is always open if we still have equity in our trading account

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  7. #1026
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    make good calculation for how much capital will used for trading and sure that we understand to manage the risk do not use the money for trading when we have not yet got ready for proper trading and if want to try it then good with use low capital. means do not use the money or afford money losing because forex is not a gambling. then it means traders need to really make good preparation and take it with full responsibility.
    so before think to invest. good calculation is needed and based on good managements

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  8. #1027
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    Forex is a risky business so before we make a deposit in the live account to trade we need to first learn and understand this trade well, and when we make a deposit it is very important that we deposit money we can afford to lose in the market, for capital management we must risk no more than 5 percent og our equity on one trade.

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  9. #1028
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    Money deposited in forex must be managed well if really we must stay long in here and make sustainable income. Forex is that kind of trade that gives us good experience to earn well and right here we should work hard to become successful and try as much as possible to minimize our risk. A good way to trade good is for us to manage our risk and understand how we could grow better to earn sufficient income from forex. We can make it and we can grow to be a success here if we work hard.

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  10. #1029
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    It highly important that we deposit what we can afford to trade in the market and avoid depositing what we can't afford to lose the forex market is a risky business where anything can happen anytime that's why it's highly important that we deposit what we can afford to lose and manage what we deposit properly.

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  11. #1030
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    Quote Originally Posted by Kelv View Post
    Forex is a risky business so before we make a deposit in the live account to trade we need to first learn and understand this trade well, and when we make a deposit it is very important that we deposit money we can afford to lose in the market, for capital management we must risk no more than 5 percent og our equity on one trade.
    This is the market that will not allow any trader to pass through it without learning, else, such daring traders will only lose their money to the market. Even at learning, there are good ways to trade so that traders will not be affected in any way, and mostly, the management of the trader should be intact for account preservation.

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