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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. #21
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    dealing is a company we need to be calculative when doing this company we don't business the industry for the benefit of dealing,we do this company depending on information and knowing we are having to do this company,the kind of knowing we are having to do this company figure out our achievements in this company,this is why we need to have a strategy when dealing the industry.

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  3. #22
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    capital management is very much essential for a trader in order to stay in the Forex market for a long time because we won't get the profit all the time in single good so we need to invest on various good to earn profit and also we need to save some of the capital for our future investment so that's why management of capital is a must.

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  4. #23
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    many of the traders say that there is no need to use the stop loss for many reasons .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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  5. #24
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    it had to be balanced with how to create a good trade in which we learn in this business and we take into account the trade well so we can do a trade with the steps that we can indeed get fit in a way that is right for us in designing trade can generate good profits and true in this business

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  6. #25
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    Quote Originally Posted by dollmayo View Post
    we get pleasure from ones see. It is rather much critical for your dealer to possess suitable income managing currently being executed in each buy and sell along with income required element. As far as ones see with regards to busting your put in, i'd personally claim that the definitely not obligatory that people may perhaps eliminate, you will discover reversals or even draw back also happening,
    I think it is important to understand both this type of management but to be honest all this come in one heading that is money management. This is where you learn to manage your inflow with that of your outflow and some how always keep your inflow greater than that of your outflow.

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  7. #26
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    Deposit management is not very essential but capital management is very very crucial in trading. not matter how much you deposit but if you confine some limits of use to it then you will surely get benefited when you are in trouble and nothing could be done after certain point. If tarde management , risk management are not carried out properly then also one can save some amount of money from loss by capital management.

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  8. #27
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    Quote Originally Posted by FOREXFOREX View Post
    Deposit management is not very essential but capital management is very very crucial in trading. not matter how much you deposit but if you confine some limits of use to it then you will surely get benefited when you are in trouble and nothing could be done after certain point. If tarde management , risk management are not carried out properly then also one can save some amount of money from loss by capital management.
    Yes trading with some amount of capital is very important rather then worrying about our whole invested capital. We must not take our capital for granted. we should always make some effort to reinstates our capital and of we suffer loss we should try to recover it rather then withdrawing profits from it.

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  9. #28
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    Quote Originally Posted by rinaji View Post
    Deposit Management and Capital Management
    Deposit and make money with forex business in our life is very essential to make a good balance. A good trader never deposit all of his capital to make money. I also do not deposit all the capital or profit to make money in forex business. It is well to do that we use a good money management and also withdraw 75% profit to make a balance.

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  10. #29
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    Quote Originally Posted by Abu George View Post
    many of the traders say that there is no need to use the stop loss for many reasons .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
    If we are using swing trading method then we don't need to use stop loss, the problem happen if we are using scalping method or intra day method which make us using medium or high trading volume and it will be dangerous if we don't use stop loss. Our account may get margin call because it can't survive when our prediction is wrong.

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    Last edited by thenight; 07-31-2014 at 06:49 AM.

  11. #30
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    Quote Originally Posted by mortuza View Post
    Deposit and make money with forex business in our life is very essential to make a good balance. A good trader never deposit all of his capital to make money. I also do not deposit all the capital or profit to make money in forex business. It is well to do that we use a good money management and also withdraw 75% profit to make a balance.
    i think high skill makes more profit in forex trading because it is related to many matter like currency,internet use,English language proficiency ,business policy etc to maintain which skill is essential that make consistent profit in trading.

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    Quote Originally Posted by mortuza View Post
    Deposit and make money with forex business in our life is very essential to make a good balance. A good trader never deposit all of his capital to make money. I also do not deposit all the capital or profit to make money in forex business. It is well to do that we use a good money management and also withdraw 75% profit to make a balance.
    i think high skill makes more profit in forex trading because it is related to many matter like currency,internet use,English language proficiency ,business policy etc to maintain which skill is essential that make consistent profit in trading.

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