Under-capitalisation

megamuel

megamuel

Experienced member
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What are the disadvantages of being under capitalised? Other than the obvious of not being able to make as much money if you are consistently profitable... I'm thinking in relation to entries and money management. Would you trade any differently if you had more money?

Sam.
 
Your risk of ruin is essentially 100%... that ain't even a disadvantage, it's a fundamental flaw.
 
arabianights said:
Your risk of ruin is essentially 100%... that ain't even a disadvantage, it's a fundamental flaw.
Click to expand...

It's a learning experience. Some get it, some don't.

Starting with a $500 account, you can be profitable. The real problem is for all your time and efforts you just don't make much real money. Even if you make a healthy 10% per week, thats only $50. A lot of traders would feel this is not worth all that they put into it so they tend to overleverage or not use proper stops and money management to try to increase the profit to maybe $100 per week. Inevitably, they then go bust.

Peter
 
.$500k is the ideal capital for a trading operation,with expected profit of $70m annualy on a full time operation.Try a simple compounding calculation using $500k , with 10 % weekly profits , potentially achieving $70m annually..The amount of capital makes a huge difference to how agressively one can trade , eg if you have $20k in an account ,there is a reluctance to trade agressively and risk a small pot of cash.One can easily afford to hire assistants on a $500,000 account, whereas on a $50k account it is not possible, unless online staff are operating from India.Compounding can be achieved much more easily on a large account , this is because of minimum trading size and it is not simple to compound small sizes.

All the new boys are like a boxer in a boxing ring , taking punches but delivering soft blows , and after delivering soft blows they stop for a while and start learning, or developing systems whilst in the middle of a boxing match taking blows or concentrating on another occupation.Hey coach what do I do now , I been hit.These traders are trading half hearted ,pussy footed and without aggression or balls.

Trading requires full time concentration, sitting infront of multiple computer screens and monitoring the prices every second on all currency pairs,indexes and instruments.It requires a trader and two to three other full time assistants.Same energy and effort is required to trade $10,000 or a $10m account. If trading is done full time , in a professional operation, one can achieve 4 figure % returns..

At present if you do not trade full time, and your time is dedicated to three jobs i.e learning, another full time occupation , developing trading systems and methods,developing and trading automated software and also manual trading , YOU ARE GUARANTEED TO FAIL. .Trading requires a load of energy ,full concentration on the screens , substantial capital(ideally $300k to $500k) and agression to trade . In addition trading knowledge,practical trading skills , trading methods,trading risk management and understanding of market behaviour is required ,all of which have to be gained .Trading half hearted on the three five jobs will not produce the expected returns,because attention can not be given fully to trading, and can lead to losses.
 
oildaytrader said:
.$500k is the ideal capital for a trading operation,with expected profit of $70m annualy on a full time operation.Try a simple compounding calculation using $500k , with 10 % weekly profits , potentially achieving $70m annually..The amount of capital makes a huge difference to how agressively one can trade , eg if you have $20k in an account ,there is a reluctance to trade agressively and risk a small pot of cash.One can easily afford to hire assistants on a $500,000 account, whereas on a $50k account it is not possible, unless online staff are operating from India.Compounding can be achieved much more easily on a large account , this is because of minimum trading size and it is not simple to compound small sizes.

All the new boys are like a boxer in a boxing ring , taking punches but delivering soft blows , and after delivering soft blows they stop for a while and start learning, or developing systems whilst in the middle of a boxing match taking blows or concentrating on another occupation.Hey coach what do I do now , I been hit.These traders are trading half hearted ,pussy footed and without aggression or balls.

Trading requires full time concentration, sitting infront of multiple computer screens and monitoring the prices every second on all currency pairs,indexes and instruments.It requires a trader and two to three other full time assistants.Same energy and effort is required to trade $10,000 or a $10m account. If trading is done full time , in a professional operation, one can achieve 4 figure % returns..

At present if you do not trade full time, and your time is dedicated to three jobs i.e learning, another full time occupation , developing trading systems and methods,developing and trading automated software and also manual trading , YOU ARE GUARANTEED TO FAIL. .Trading requires a load of energy ,full concentration on the screens , substantial capital(ideally $300k to $500k) and agression to trade . In addition trading knowledge,practical trading skills , trading methods,trading risk management and understanding of market behaviour is required ,all of which have to be gained .Trading half hearted on the three five jobs will not produce the expected returns,because attention can not be given fully to trading, and can lead to losses.
Click to expand...

I thought it was my @rse making that horrendous smell but it transpires it's your chat...
 
gooseman said:
I thought it was my @rse making that horrendous smell but it transpires it's your chat...
Click to expand...


Isn't that world of amateur traders and pension thieves?

95% lose in this game of cat footing trading, cat beaten traders,cat whipped traders,cat shotcake suckers,cat whipped, semi cat whipped ,cat cuddled, cat cuddlers half hearted trading by half assed wits.
 
wackypete2 said:
It's a learning experience. Some get it, some don't.

Starting with a $500 account, you can be profitable. The real problem is for all your time and efforts you just don't make much real money. Even if you make a healthy 10% per week, thats only $50. A lot of traders would feel this is not worth all that they put into it so they tend to overleverage or not use proper stops and money management to try to increase the profit to maybe $100 per week. Inevitably, they then go bust.

Peter
Click to expand...

If you can make 10% a week thats all it takes - keep at it compounding for a few years
you will do very well for yourself.
But I suppose human nature don't allow for it.

http://www.math.com/students/calculators/source/compound.htm
 
2 things; in order to *trade* there is no excuse for under-capitalisation given you can trade at ten cents a pip or micro lot...

However, in order to make a decent living do you need to be that well capitalised? cba doing the done to death maths in full but if it's SB-ing at 5 quid a pip, taking trades 'off' 10-15min charts/PA, with 1.5% risk, and you want to earn (at least) a grand a week you need what, ten grand?
 
oildaytrader said:
.$500k is the ideal capital for a trading operation,with expected profit of $70m annualy on a full time operation.Try a simple compounding calculation using $500k , with 10 % weekly profits , potentially achieving $70m annually..The amount of capital makes a huge difference to how agressively one can trade , eg if you have $20k in an account ,there is a reluctance to trade agressively and risk a small pot of cash.One can easily afford to hire assistants on a $500,000 account, whereas on a $50k account it is not possible, unless online staff are operating from India.Compounding can be achieved much more easily on a large account , this is because of minimum trading size and it is not simple to compound small sizes.

All the new boys are like a boxer in a boxing ring , taking punches but delivering soft blows , and after delivering soft blows they stop for a while and start learning, or developing systems whilst in the middle of a boxing match taking blows or concentrating on another occupation.Hey coach what do I do now , I been hit.These traders are trading half hearted ,pussy footed and without aggression or balls.

Trading requires full time concentration, sitting infront of multiple computer screens and monitoring the prices every second on all currency pairs,indexes and instruments.It requires a trader and two to three other full time assistants.Same energy and effort is required to trade $10,000 or a $10m account. If trading is done full time , in a professional operation, one can achieve 4 figure % returns..

At present if you do not trade full time, and your time is dedicated to three jobs i.e learning, another full time occupation , developing trading systems and methods,developing and trading automated software and also manual trading , YOU ARE GUARANTEED TO FAIL. .Trading requires a load of energy ,full concentration on the screens , substantial capital(ideally $300k to $500k) and agression to trade . In addition trading knowledge,practical trading skills , trading methods,trading risk management and understanding of market behaviour is required ,all of which have to be gained .Trading half hearted on the three five jobs will not produce the expected returns,because attention can not be given fully to trading, and can lead to losses.
Click to expand...

Let me entertain this for a second..

Let's assume someone has a $20 mill trading acc. Let us also use a 2% risk. That would be $400k risk per trade. Let's also say the avg SL is 100 pips giving a pip amt of $4k a pip. How easy do you think it is to get a 400 lot trade on? I would say pretty tricky.

Now the biggie...anyone earning on avg 40% a month with those sort of numbers would be the most successful trader in history. Buffett manages around 30% a year. Turtles managed 80% a year for several years. 40% a month is utter nonsense.
 
Dubai said:
Let me entertain this for a second..

Let's assume someone has a $20 mill trading acc. Let us also use a 2% risk. That would be $400k risk per trade. Let's also say the avg SL is 100 pips giving a pip amt of $4k a pip. How easy do you think it is to get a 400 lot trade on? I would say pretty tricky.

Now the biggie...anyone earning on avg 40% a month with those sort of numbers would be the most successful trader in history. Buffett manages around 30% a year. Turtles managed 80% a year for several years. 40% a month is utter nonsense.
Click to expand...

I'd agree that 40% on those big numbers would be insane...
 
Maybe it's just the accountant in me or maybe it's because I still haven't found what I'd call a proper approach to trading but that seems like a big ask to me.
 
Yes, I think so too.
Although not impossible if you learn to be ultra picky on your trades
and don't expect the 10% every consecutive week.
Still, I'm not there yet either
With the example given, starting with £500, 100 weeks of 10% returns over say a 4-5 year period no stress to make 10%, or even anything at all, every week.
would equal £10566207.3, 7% gives £537277.76.
Not bad.
I'll start today.
 
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