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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. #31
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    In my opinion that the more your capital are the more your chances of continuing for a long time but it must be accompanied with the money management by meaning that opening a very small volume by the way which guarantee to not finish the main balance thus we can save and protect our account of being margin

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  3. #32
    Trader rinaji's Avatar
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    Quote Originally Posted by jemmy11 View Post
    In my opinion that the more your capital are the more your chances of continuing for a long time but it must be accompanied with the money management by meaning that opening a very small volume by the way which guarantee to not finish the main balance thus we can save and protect our account of being margin
    Not about veriy small volume of transactions, but about money management, we do not know how the size of the transaction volume in the numbers if you say "very small", Are you going to use 0.1 lot size (cent) if you invest $ 1,000? I think it's too small. We should have a good calculation to establish the lot size.

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  4. #33
    Trader dkarev's Avatar
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    basically money management is the most important thing in this business there is no trading strategy that work in this business without proper money plan and this is why we need to have a money plan when trading the kinda money plan we are using when trading determine our success in this business when trading.

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  5. #34
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    Quote Originally Posted by cozard007 View Post
    It is hard for me to thank a poster but I thanked this one because of the way he explained this. I love a trader that looks about trading beyond the getting of the direction, but making good trading system to secure the investments as well. I love the traders that know how to trade and get a good risk and money management in the market, that is what will save the trader at the end.
    I believe that is you really want to manage you account and your capital I think that you must learn how to manage it in the demo accounts and that is the only way I have to tell you to learn money management. The thing is that if you cannot learn these activities in time it will most definitely end up in the loss you don't want to make.

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  6. #35
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    In forex trading, we must try to minimize our loss at all cost. We must try to only risk how much we can afford to loose this is where money management approach comes in. We should have a good money management approach before opening any trade. A good trading plan is also necessary.

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  7. #36
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    Quote Originally Posted by berich View Post
    In forex trading, we must try to minimize our loss at all cost. We must try to only risk how much we can afford to loose this is where money management approach comes in. We should have a good money management approach before opening any trade. A good trading plan is also necessary.
    you need to have high skill for better profit Without 100% more knowledge we can gain 100% in this market I think if you have high skills and more knowledge then your success will be absolute in Forex trading business.

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  8. #37
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    trading is usually a business i need in order to always be calculative Whenever doing your company we dont trade your own market for its sake of trading,we do the corporation In accordance with knowledge IN ADDITION TO understanding when i tend to be obtaining for you to do the business,the kinda understanding i tend to be obtaining for you to do your company identify MY success with your business,this is actually why my partner and i need to obtain a plan When trading the market.

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  9. #38
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    Money management in trading is very important factor.Yes dividing the capital money and using a few of it for trade is a good choice and a better way of money management .Traders not using stop loss in trading is bigger risk so they shall have to be a good risk management for trading in such a risk.

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  10. #39
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    Quote Originally Posted by rinaji View Post
    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.
    Basically cash management is that the most vital issue during this business there\'s no trading strategy that employment during this business while not correct cash set up and this can be why we\'d like to possess a cash set up once trading the kind of cash set up we have a tendency to square measure exploitation once trading verify our success during this business once trading.

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  11. #40
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    good capital management is one thing that separates from a loser and winners in Forex trading.the one good thing we can do with our account is to managed it well because loses is inevitable in Forex.we need to trade again to continue our practice and we need live account to do that.

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