Deposit Management and Capital Management - Page 209
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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. #2081
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    Quote Originally Posted by naeem555 View Post
    Sascha, if we can manage we can really make good orders, actually in management we people define what is our limits people do not use limits so they trade without limits so its wrong, we can securely trade if we know own limits, if we know what max loss is enough for us what max profit is enough and all things if we do not know these we can lose just
    The best way to have the account been managed so that we can make good order is that we get to be disciplined, that goes a long way in helping traders, because a trader who is disciplined will stick to the game plan and will not be in a hurry. You know a whole lot of traders hasn't been able to have done the right thing because they are not following the right approach in trading. Using the adequate money invested and then using most importantly risk management.

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  3. #2082
    Trader Silhouette's Avatar
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    Quote Originally Posted by Striker$ View Post
    The best way to have the account been managed so that we can make good order is that we get to be disciplined, that goes a long way in helping traders, because a trader who is disciplined will stick to the game plan and will not be in a hurry. You know a whole lot of traders hasn't been able to have done the right thing because they are not following the right approach in trading. Using the adequate money invested and then using most importantly risk management.
    Managing our deposit and capital before we start to trade are basic knowledge that traders must have before they decide to make money safely. Even if traders are going for rough trading with high risk, it's still important for them to manage their funding so they don't lose a lot from market and keep their wallet safe from complete termination of their own money.

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  4. #2083
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    Quote Originally Posted by Silhouette View Post
    Managing our deposit and capital before we start to trade are basic knowledge that traders must have before they decide to make money safely. Even if traders are going for rough trading with high risk, it's still important for them to manage their funding so they don't lose a lot from market and keep their wallet safe from complete termination of their own money.
    yes we must need to trade safely, because if we trade properly if we gain some proper experience we can do good, in trading safety is everything from my opinion because if we are working safely we can trade well and can earn something good, but if we are not trading safe and trying some risky we can lose more, so learn and trade properly with rules

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