Deposit Management and Capital Management - Page 199
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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. #1981
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    Quote Originally Posted by simisola View Post
    No stop loss means no risk management, there is nothing as painful as losing your money because you simply could not wait for the right trades being that your current trade has no stop loss, trading is a risky adventure, we cannot increase our risks exposure by the refusal to use the stop loss, this is not how people become professional in this market, it is very wrong to trade without stop loss.
    You are right losing an account is very powerful and in beginning most of us have the wrong way of trading without the stop loss. So in beginning it is advisable to trade with small deposit and not invest big sums for trading until we are really good with risk management. Because any kind of slip in discharging our responsibilities as a trader or any carelessness can bring us big loss.

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  3. #1982
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    We need to take learning seriously and then see the reason why there have been a lot of people losing their money and then learn also. Trading is risky, your success can only be gotten when you really have the good intention in the business and then the trader knows the right thing to be done and also avoid taking wrong trading decisions. Managing our money is so much important, that means investing the amount of money that you can afford losing.

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  4. #1983
    Trader juniorpeters's Avatar
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    stop-loss is very important for every trader new or old or experienced we need to trade the market using stop-loss so we don't lose our money to a very volatile news.money management and risk management is a very good start because that is the only way we can trade the market safely,although we don't have to play it safe all the time if we really want to be successful as Forex traders.

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  5. #1984
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    A proper dealing of loss is important if we must have a good means to enjoy good trade in forex, we have a good means to manage risk, we will likely enjoy this trade and we will be happy to have great trading plans in this business. Traders should deposit the amount of money they can afford to lose at always, never take the unnecessary risk as forex is also risky and tough business and proper management is the key to getting success.

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  6. #1985
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    Quote Originally Posted by Azeem View Post
    A proper dealing of loss is important if we must have a good means to enjoy good trade in forex, we have a good means to manage risk, we will likely enjoy this trade and we will be happy to have great trading plans in this business. Traders should deposit the amount of money they can afford to lose at always, never take the unnecessary risk as forex is also risky and tough business and proper management is the key to getting success.
    yes we should not take more risk because no one can sure about profit this is reality, we can lose at any time so give some proper time to trading and learn it properly, one thing remember our management is 50% of our trade so if anyone think that we can do good without that so its wrong, we should trade with some proper management so use it and use big capital as well

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  7. #1986
    Trader juniorpeters's Avatar
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    At all time we should always learn to trade the market using stop-loss because that is the only way we can be able to secure our trading account from losing trades.risk management is the back bone of every successful trading strategy if you don't learn to trade using risk management you might end up blowing many trading account and even more if you still avoid trading without it.

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  8. #1987
    Trader cutiekc's Avatar
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    The first rules is that the trader always makes sure that the amount of money that they are investing is the amount of money that you can afford losing. Trading with the adequate use of good money and risk management is important and will get to make us profitable as well. So, invest wisely and never be in a hurry to take trades without having to see confirmations.

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  9. #1988
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    Quote Originally Posted by cutiekc View Post
    The first rules is that the trader always makes sure that the amount of money that they are investing is the amount of money that you can afford losing. Trading with the adequate use of good money and risk management is important and will get to make us profitable as well. So, invest wisely and never be in a hurry to take trades without having to see confirmations.
    you are exactly right if we are investing more then affordance then we can lose. there are many reasons for this thing like if we are investing more then our afford limit we can confuse in trading we can have fear of loss and when we have fear we can really lose here. so from my experience we should trade with patience and with normal behavior otherwise this business is not easy in sense of earning, for earning required good practice on demo and real experience as well

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  10. #1989
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    money management is very important for us because without use good money management in trading we will get easily market trend. Traders success is become possible only if they are focus on their learning and use these trading methods with patience because without patience traders success is never possible and they will never get success on this business.

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  11. #1990
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    Quote Originally Posted by abhil View Post
    money management is very important for us because without use good money management in trading we will get easily market trend. Traders success is become possible only if they are focus on their learning and use these trading methods with patience because without patience traders success is never possible and they will never get success on this business.
    when we focus on learning we can earn later, there are two type of people here one who want to earn just no matter what way they use so most of time they choose wrong way and they lose here but some people get real time experience so they can be good when they want to become expert trader, so their earning process can be easy and automatic, but other one mostly try some robots or some wrong ways so they lose

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