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Thread: Deposit Management and Capital Management

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    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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    If you lose, be patient. If you win, stay humble

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    Registered user shambca7's Avatar
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    in forex market money management plays very important role. there may be lots of chances of losses while in trading if you have lack of money management. if we have good amount of equity then you will have more chances to win trade otherwise there is lots of chances to losses in forex market. in simple term there should be proper money management

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    Registered user Ndayakz's Avatar
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    By dividing the capital that we have before it is deposited into the broker as illustrated at the beginning of this thread will not be too much different in the calculation of risk when compared with the deposited whole and followed by setting risk limits. But there must be cautious when using dividing before depositing the capital, that is we have to calculated also how much the margin requirement to open a position and also must calculated how much percent margin level for stop out because if not will be lead to the strength of the capital will be reduced and the risk calculations will be wrong, especially for those who use low leverage because margin requirement is large.

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  4. #43
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    It is important to note here that capital is very essential for the success of our forex career. When we want to trade forex, it is important that we should have good capital in our trading account in other for us to be able to trade with minimal risk and greater opportunities of better profit.

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    Registered user High's Avatar
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    Quote Originally Posted by aris90 View Post
    You say that you take 10% risk on your trade. It is too big for me. Deposit 100USD and taking potential loss 10USD. It mean 10% risk. Based on money manegement we can not put risk too high. Because time to recover the loss. The more bigger loss percentage per trade, making long time to recover.
    I see that, trading balance from any loss to be recover need enough time. So, should plan and discipline or risk management following is necessary for every trader. Time and tit wait for none. its true, If any mistake is being at live trading account and its to recovering need enough time at this graph. So, Basically need strong trade plan for become success in this market.

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  6. #45
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    As long as a trader can protect the deposit they are trading with in the market, the more the chance the traders will have to get success in this market. One thing that keeps the trader`s alive in this market is how to work better on the way the manage their risk or money by the use of stop loss, this is very important.

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  7. #46
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    well, stop loss is not a meaning of money management, and a trader who did not use stop loss , the have the reasons, and maybe like you, this is very good, you manage the capital before invest it to the account, and you can do trading with use your own trading system, well, it is good to follow then we have some chances for trading forex,
    i totally agree with your system because i seldom to use stop loss, and even change it with hedging, it is better

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  8. #47
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    [lang=id]a trader who did trading without stop loss is not a careless trader, and i guess they have the reason about it and maybe they are same and like you, they had managed everything from the beginning and they knew the consequences from it, and it is good to divide the capital as money management before set it into the balance for trading forex[/lang]

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    to work in forex trading business we need to deposit first. without deposit we can not work in forex trading business. without management our deposit in forex trading business we can not avoid loss in our trading at all. deposit and capital management play a very important role in forex trading business.

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  10. #49
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    Quote Originally Posted by Abu Shaharia View Post
    to work in forex trading business we need to deposit first. without deposit we can not work in forex trading business. without management our deposit in forex trading business we can not avoid loss in our trading at all. deposit and capital management play a very important role in forex trading business.
    of course in doing forex business we must have terlbih first deposit .. if we are confident with the skill and ability in the trade I guess we could also depositing money is great but for the beginning I suggest do not,, more we increase the ability of our management of money or capital and tried to use bonuses beforehand to avoid high failure

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    Quote Originally Posted by Abu Shaharia View Post
    to work in forex trading business we need to deposit first. without deposit we can not work in forex trading business. without management our deposit in forex trading business we can not avoid loss in our trading at all. deposit and capital management play a very important role in forex trading business.
    of course in doing forex business we must have terlbih first deposit .. if we are confident with the skill and ability in the trade I guess we could also depositing money is great but for the beginning I suggest do not,, more we increase the ability of our management of money or capital and tried to use bonuses beforehand to avoid high failure

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  11. #50
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    Planning is very important in this field.a trader cann't earn safely from this field without having proper strategies.
    A trader can deposit money with a proper plan.we cann't earn without planning.we can safely earn by having a reliable plan and tested strategies.

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