Deposit Management and Capital Management - Page 201
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Thread: Deposit Management and Capital Management

  1. #1
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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. #2001
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    Quote Originally Posted by Leonvic View Post
    Skill and knowledge has a long term effect for our profits making, deposits money management entails using the right mindset that won't destroy whatever you have learnt from all the year you have been a trader, the right skills will lead people to making the right decision and everything will be okay from that moment, but endangering your account will be because you avoid the knowledge of money management, this is often happening with many newbie, they want success but don't want to acquire the skills for it.
    i think skills we gain here can be reason of earning profit but for gaining skills also we need to work in right way. first of all we people need to use some demo account practice. when we have done that then we can think about earning later. so do some money management for trading also because when we have money management we can avoid big loss. we can get a way to earn, otherwise if we do not have it we can try to earn from every order that is not possible

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  3. #2002
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    Quote Originally Posted by touqir View Post
    i think skills we gain here can be reason of earning profit but for gaining skills also we need to work in right way. first of all we people need to use some demo account practice. when we have done that then we can think about earning later. so do some money management for trading also because when we have money management we can avoid big loss. we can get a way to earn, otherwise if we do not have it we can try to earn from every order that is not possible
    skills are some time can be just by giving our time, when we give time to our trading we learn many things in trading so that is our success here really, because if we have good experience if we have good skills we can easily understand market and can earn also,management is one of the best thing which make us able to earn if we are not able to earn we can lose just, so do management as much as you can that planning is necessary

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  4. #2003
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    Money management comes first in the business at all times, there is no way a trader will be able to become profitable traders when they have not learned and when they have not developed a good trading strategy. Know the amount of money that you can afford losing and in a nutshell, that should be the amount to be invested so that you don't get all emotional and then thinking about losing your money.

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  5. #2004
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    its very important that we try to manage our funds using the both of this tools,Forex trading is very risky and to minimize the risk of losing our trading account to the market we need to be very discipline in applying this things to our trading.i really don't see any difference in both o this because they are both after the management of a traders trading account.

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  6. #2005
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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. Deposit management is very important the forex market is risky if you don't want to regret ever trading in the forex market you need to make sure that you deposit only the money you can afford to lose.

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  7. #2006
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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. Deposit management is very important the forex market is risky if you don't want to regret ever trading in the forex market you need to make sure that you deposit only the money you can afford to lose.
    yes we should deal with loss actually after some losing money here we should define why i am losing if we understand that we can do good later. so make sure you trade properly with it and it is possible when we learn from our mistakes these are also our teachers so do not think you can not earn here, you can earn but you need to increase your experience level and that is possible just when you learn it and want to earn here

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    Quote Originally Posted by altafch View Post
    yes we should deal with loss actually after some losing money here we should define why i am losing if we understand that we can do good later. so make sure you trade properly with it and it is possible when we learn from our mistakes these are also our teachers so do not think you can not earn here, you can earn but you need to increase your experience level and that is possible just when you learn it and want to earn here
    In many cases as i see the main reason why many traders lose in Forex is they dont give the needed importance for managing risks. From our novice stage itself we should be strict with risk management and learn with priority how to effectively manage our risks. In my beginning levels I have been much careless in using my money, but now I have learned the required lessons and discipline.

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  9. #2008
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    Getting prepared to manage our capital is very important to see we can handle our risk and protect our investment. Our capital must be managed at every cost and traders in this business must therefore learn to risk what they can afford to loose in this trade. If we can manage our investment and follow the process to build a quality trade, it will enable us to trade good all the time . Let's be ready to manage our investment and let's understand the fact that we can survive if we can deal with risk.

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