Deposit Management and Capital Management - Page 8
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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. #71
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    Quote Originally Posted by aa1 View Post
    yes when emotions take control over the trader then the trade is no longer will be able to trade with his/her best efforts rather the trade will commit a lot of mistakes in buying/selling and because of it the trader account get demolished.
    Money and risk management is the way to make us aware of the danger and the risk if we going to open a position. We will going to understand how our account will going to react on certain market conditions. Its just a matter of time that you will realize that at this amount of pips loss you will get MC and at this amount of lot size you will get this free margin.

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  3. #72
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    Quote Originally Posted by budado View Post
    Money and risk management is the way to make us aware of the danger and the risk if we going to open a position. We will going to understand how our account will going to react on certain market conditions. Its just a matter of time that you will realize that at this amount of pips loss you will get MC and at this amount of lot size you will get this free margin.
    It is very much important for the traders to take the positions which is in accordance with the long term market sentiment, such that taking up the best trade becomes possible. Its always the winning probability that will bring the success for the traders along with ideal money and risk management implementation.

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  4. #73
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    when my spouse and i managed to get to be able to watch your own eur/usd head to the 1.35 area my partner and i wait The idea to be able to very long AND ALSO my partner and i hope It\'s going to happen spoon good trade with regard to all but throughout the holiday your market moves throughout tight location along with the spread is too high we can wait after your current holiday IN ADDITION TO view what will be

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  5. #74
    Trader meheding's Avatar
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    Management is very important for every trader. I believe the management is the most important thing to survive in the Forex market. When I was totally new in the Forex I use to trade with high risk and didn't follow any management and because of this I got so many loss. And now I'm trying to be a disciplined trader by maintaining my money and risk management.

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  6. #75
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    In my standpoint, Deposit management is harder when you have an extra large capital otherwise deposit management is not a big task. However, risk will reamin be there no matter what the size of our investment is. It stays with the small as well as with the large trade too. Risk management then is the final way to minimize risks.

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  7. #76
    Trader rinaji's Avatar
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    Quote Originally Posted by ATHAR View Post
    In my standpoint, Deposit management is harder when you have an extra large capital otherwise deposit management is not a big task. However, risk will reamin be there no matter what the size of our investment is. It stays with the small as well as with the large trade too. Risk management then is the final way to minimize risks.
    Yea, you might think that deposit management is not a big task, but I do not know about your idea that deposit management is harder if we have a large capital. I do not understand fully about your opinion. Are you able to explain about this? Because I believe every person has a different way in managing their capital.

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  8. #77
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    You say that you acquire 10% risk in ones trade. This can be too big regarding me. Deposit 100USD ALONG WITH taking potential loss 10USD. It mean 10% risk. As outlined by dollars management i are not able to put risk too high. since the date in order to recover your loss. the further bigger loss percentage per trade, generating extended time to be able to recover.

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  9. #78
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    I think forex is very hard and risky business in the world.so we need to proper money management and risk management.we should keep proper stop lose.we should need to take profit properly.so we need to long time experience.we need to get huge knowledge.Then we can easily success in forex.we need to use stop lose.Because we know stop lose reduce our forex loses very much.

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  10. #79
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    Deposit management and capital management are two tings .But this are like same.They are the part of your account.Deposit means that money which you enter your account and capital means that amount which is total of deposit money and bonus money.To do trade in profit way a trader should know the management of this two things.

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  11. #80
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    Quote Originally Posted by khodega View Post
    Deposit management and capital management are two tings .But this are like same.They are the part of your account.Deposit means that money which you enter your account and capital means that amount which is total of deposit money and bonus money.To do trade in profit way a trader should know the management of this two things.
    The trader who can manage to scale up his capital to a better and growing extent is the only one who would succeed in the forex trading business. Hence, one should always make sure that their money or asset is not depreciating with their trades but it should appreciate over a period of time for achieving financial freedom.

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