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Thread: Deposit Management and Capital Management

  1. #1
    Registered user 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. #101
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    This is what traders should learn before anything in the market, if you have it all, then you will never lose your money. But when you are trying to preserve the capital you are trading with, do not let it make you fear, just let it be in the form that will help you to have better trading expertise, and have plan on risking and earning.

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  3. #102
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    When a trader could safe the money he has in the market, such trader will have better for success in this market, it is never a thing that is hard, but most traders do not know the next things to do when it is comes to protecting the money. This will start form the way you risk in the market, and the way you get money more than the risk you take.

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  4. #103
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    As for me i think it is better and safer to deposit all the big capital at once and then trade with a very small lot size like 2% or 3% of capital. Because trading with small capital like $100 will only encourage the trader to double lot size which is wrong.

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  5. #104
    Registered user rinaji's Avatar
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    Quote Originally Posted by dollmano007 View Post
    i'm sure we are able to not necessarily receive good results by simply buying and selling aimlessly nevertheless in the event that we've talk with suitable planning, it becomes easy to pull through as well as acquire good take advantage of this particular area. it is a risky organization as well as we are able to not necessarily receive good profit devoid of hardwork.
    Doing buying and selling is easy, but it's not just about buy and sell, this is a business, we must have good planning, good strategy, good money management, and control psychology. Indeed, it looks like a simple thing, but it is complex. But, in fact its a simple thing, not as complex as what we thinking about.

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  6. #105
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    Just try to use 2% of your trading capital. In this way you can trade 50 times before you will experience stop out. But I guess theirs no good trader who going to get stop out after 50 trade. So my advice is very simple. keep on trading and making big money. I do love forex trading and I do end up having two to three hundred dollars a month profit later on.

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  7. #106
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    if the capital is large enough the market may revers on your trade but certainly it will get back to your goal whatever it takes long time it will get to your profit
    but if we used the stop loss the chance is over of course

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  8. #107
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    If we don't use stop loss that means we use margin call to stop our loss:).In some broker that means 100% of our total capital.Let's suppose we open as large positions as we can,if our capital is 1000$,we open a position with 900$,so if we lose 100$ we'll be forced to stop loss by the broker automatically,which we only lose 100$,we still can start our trading again.

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  9. #108
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    [lang=zh-CN]some information looks like same but in real that is not same.there is huge difference difference between this two.such as deposit management and capital management.deposit management is that things where a trader use his balance so carefully and capital management means where a trader knowledge and skill for doing better things by using all asset.[/lang]

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  10. #109
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    It starts with the way the trader knows how to trade the market, if any trader can trade forex very well, then i see no reason why all things should not work well. But in any case, it is this trading system of the trader that will be questioned first. When the trading system is good, then the management will not be hard to maintain in any way.

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  11. #110
    Registered user Hukam's Avatar
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    Its very clear sense that we have to not take much high risk in trading just try to keep your trading system less risky some traders think that if they will invest less amount like USD 100 then will able to do good trading but they because of high risk trading they loose that amount within one day in forex so no matter you are investing USD 100 or USD 1000 in forex proper money managemnet is essential

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