By Noble Drakoln | Submitted On June 23, 2013
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Expert Author Noble Drakoln
The amount of capital you are putting into your futures or forex account is supposed to be risk capital. But just because it is risk capital doesn 't mean you treat it as if it is disposable. This is not Vegas. There is no house money, there are no acceptable losses, and we never let our capital ride! When it comes to trading, it is a business. You calculate your profits and losses, return on investment, return on capital, and maximum potential loss (look to the trade worksheet) in order to gain the optimum opportunity before you ever put your first dime on the table.
Can you lose your entire investment after doing all that work? Certainly. That 's the difference between taking a calculated risk and throwing your money at chance. When you take a calculated risk, losing your capital is one of many possible outcomes. When you throw your money at chance, losing all of your capital is the most likely outcome, with all other outcomes being a pleasant surprise.
How we treat that precious seed called "operating capital" is important. In George S. Clason 's The Richest Man in Babylon (Signet, 2004; first published in 1926), it was when the main character took his hard-earned savings and placed it with a partner who knew what gems were all about that he began to prosper. So must you be yo...
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...cally purchased in $10,000 increments. Sometimes after the first $10,000, the Futures Commission Merchant will allow you to purchase in $5,000 increments. You can trade at as much as 95% of their face value, while earning the prevailing interest rate. One year is currently about 4.98%, with a purchase fee of $15 to $50
Why are you trading? For profits! Yet time and time again I see traders achieve their goal only to squander it and give their profits back to the market. This ties in with the fact that you should not let your operating capital fluctuate. If you have $10,000 and you make $73, don 't leave the $73 in the trading account-"sweep" it to a profit account.
Every time you book a profit, "sweep" it to your side account. Do not trade your profits. Separate any profits you book from your principal, and move them to a completely separate account.
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