Insufficient capital: The most common factor that leads to lose

[budado]

I do agree. Me I get multiple MC. But when I invest more I end up maintaining my account and survive market volatility to the point that for the last five months I do earn good amount of money in forex trading without any problem. My main concern though is how to make it big in forex trading without any problem.

 

[Decub]

Getting MCs could just be one of the things a new trader battles with due to not just insufficient capital but also insufficient knowledge to manage their little capital. I feel that having to grow our capital first in Forex is a good way to have some reasonable trading capital that will stand the test of time.

 

[gkintl]

I believe that careless use of leverage is more responsible for loss than insufficient capital. Forex brokers allow leverage of up to 1:3000. Thus, even a trader with a meagre $10 in his account can still trade efficiently by using the leverage wisely. With a 1:2000 leverage and a 0.01 lot size, only around $1 is blocked. A gain of 50 pips per week will triple the capital in less than a month. However, most beginners use almost the entire capital while placing an order. This leads to margin call and subsequent liquidation of positions. High leverage is a boon to smart and wise traders. For the rest, irrespective of the capital employed, trading will always remain a night mare.

 

[ryuken]

As far as i know, capital being low has nothing to do with loss. the loss is different metric. because it deals with our actions and the capital is something we need for the trading. i don't understand how the money being low is bad and lead to the loss. many traders do the low trading as far as i know.

 

[Ruchibhar]

i dont think so. you can easily make money if you know the main factors of forex.

 

[barood4money]

The most common factor to lose money at trading is the lack of knowledge and skills about forex trading. There are many people who think that it is very easy to earn huge money from trading at very first day. But it is just a rumour.

 

[amit.neogi]

I don't think so. Whether you have $1 or $100, your knowledge and strategies will decide your profit or loss. If you don't know about trading then you will suffer loss by investing $1 also.

Yes you just absolutely right with out knowledge and idea you invest will be smashed but i think a low investment in trading sector could not be success because if you want to hold any position then you will not be able for the same and if hold any position for long term and at that time if the market goes your oposit then also you need back a good fund other wise you have to face the loss.

 

[ryuken]

Like I said earlier, the lack of funds is not a loss. It is like lack of fuel and the care never begin to have race with others. I have seen that some of the times we have to just rely on our small funds and then begin from there. That is what works most of the time for many of us.

 

[barood4money]

Like I said earlier, the lack of funds is not a loss. It is like lack of fuel and the care never begin to have race with others. I have seen that some of the times we have to just rely on our small funds and then begin from there. That is what works most of the time for many of us.

Yes.. I totally agree with you. Lack of capital never becomes an issue at trading if you have the sufficient skills and knowledge about forex trading. There are many people who have started trading with a low amount and now earning a good amount.

 

[Decub]

I believe that careless use of leverage is more responsible for loss than insufficient capital. Forex brokers allow leverage of up to 1:3000. Thus, even a trader with a meagre $10 in his account can still trade efficiently by using the leverage wisely. With a 1:2000 leverage and a 0.01 lot size, only around $1 is blocked. A gain of 50 pips per week will triple the capital in less than a month. However, most beginners use almost the entire capital while placing an order. This leads to margin call and subsequent liquidation of positions. High leverage is a boon to smart and wise traders. For the rest, irrespective of the capital employed, trading will always remain a night mare.

Well, there is a point there. Though in the end, it centers around expectations and the traders pattern of trading. The right choice of lot size can help a trader manage that his little capital and still compound it but most times, they are always affected by the quest to earn big with it.

 

[barood4money]

Leverage never becomes an issue if you have the trading skill. Because if you don't know how to trade then it is obvious that you will lose your money whether you are using low leverage or high leverage.

 

[Decub]

Yes but then, with a lower leverage, you minimize the effect of the losses as well in your little capital and vice versa. Though in the end, the prime concern should always be to have a capital that is sufficient enough to take care of our trade. In all, it is the trading skills that play the much needed role of success.

 

[Daisy]

Yes, of course, we all need money and so we trade so its common that we might start out with little capital. Of course, or else we would not need to trade. So, we might end up short change sometimes but that is part of the game. Hopefully, we find a way to make money. Yes, I think low capital will always be part of the problems.

 

[Pettyeve]

Whereas a trader who is trading with small capital will be close to blowing up his or her account, it is not the major reason why people fail. Traders fail in forex because they are not having enough trading knowledge and they are not having enough patience. When a trader has patience, he or she will be able to save money and raise big capital.

 

[Decub]

But you know, sometimes little capital force a trader to make use of high leverage. I doubt if there's no one who isn't moved by presumed profits. That is one thing that will happen to a trader who trades with little capital. Sooner or later, he sees that capital as quite good enough to make bigger profits only if he can increase his leverage.

 

[Faal]

Forex trading is the same like any other business we are to do and obviously beginners already had the mindset of little capital huge profits because of the existence of leverage and often they end up losing with no profits.

So do you believe that insufficient capital is the most common fator that leads to lose?

I have never seen a trader who is losing money because of his insufficient trading balance! But I see, a number of Forex traders are losing money because of their lack of trading knowledge! So, I must say trading knowledge is the key point here, not money.

 

[Lee Mark]

I don't think so. Whether you have $1 or $100, your knowledge and strategies will decide your profit or loss. If you don't know about trading then you will suffer loss by investing $1 also.

That’s the point; knowledge is the best investment here! I have seen so many successful Forex traders here who are making such a good amount of money although they started with an ordinary trading capital.

 

[Faal]

Actually between capital, skill both is important, but indeed some trader they having good skill although start with small capital but can making grow capital day by day, but rarely trader can making good profit start from small capital, if we look on profesional trader capital I think they also start using big capital because they understand if using big capital also influenced on trading result

Yes, I am agreeing with your point! In addition, I think if a good skilled Forex trader hasn’t enough trading capital, then it’s not a permanent problem! Because, they can use maximum opportunities of the market! Besides, they know how to grow a healthy trading capital.

 

[sininfinity]

Leverage is necessary thing for traders like us to trade in the market. And one can start with $100 which is not a very big amount. Just needs to control the lot size and greed and account size will grow.

 

[oliver1007]

Can you trade forex with little capital?