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Money Management: Drawdown and Low Funded Account

September 25th, 2012 Leave a comment Go to comments

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. I do have 16 years of experience in trading and investing in these markets. I, the author do not grant this work for wide distribution beyond any single individual subscriber as this publication is protected by U.S. And International Copyright laws. All rights reserved. No license is granted to the user except for the user’s personal use. No part of this publication or its contents may be copied, downloaded, stored in a retrieval system, further transmitted or otherwise reproduced, stored, disseminated, transferred, or used, in any form or by any means except as permitted under the original subscription agreement or with prior written permission. The above statements should not be construed as an investment or trading recommendation. Aileron Market Balance is a newsletter that allows subscribers to look ‘over my shoulder’ as it were, for my own personal specific trading and investing ideas and thoughts for the next week. But they are only thoughts as of the moment of publication, and are subject to change. There is no guarantee that I will enter, or have entered any of the trading or investing ideas that I discuss in this newsletter; as larger accounts may require a different strategy as the ones presented here. Any trades or investments that I discuss within this newsletter are simply my own thoughts regarding my own investing and trading outlook. I discuss which trades I take and do not take on the No Nonsense Trading Forums, as well as the Ventrilo Voice Server. Remember that entering any market is an individual decision. This newsletter simply contains my trading and investing thoughts for the next week. I personally only enter any market after watching and reading the tape and I trade using money management principles1. The losses in trading can be very real, and depending on the investment vehicle and market, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 16 years of experience in trading and investing in these markets. The Model Portfolio accounts are hypothetical accounts,with all of the inherent problems therein, which are used within this newsletter in an attempt to track the results of this newsletter, and is run for the education of other traders who should make their own decisions based off their own research, due diligence, and tolerance for risk. Any pictures used within this newsletter are believed to be public domain. Any charts that are displayed using the ThinkorSwim platform, and other pictures were obtained through Wikipedia’s public domain policy.

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  1. Gentilseulement
    September 25th, 2012 at 07:24 | #1

    A problem I see …
    A problem I see with a low-funded account are the trading fees. Let’s say it costs you in trading fees $20 to buy and then sell your trade, and that your investment fund is $1000. Even buying your position, it’s guaranteed that you’re losing 2% of your fund. If you had a $10,000 fund, then the trading fees would be only 0.2% which is pretty small.

  2. AirelonTrading
    September 25th, 2012 at 07:24 | #2

    watch?v=HjT02tmldyc
    watch?v=HjT02tmldyc

  3. tylersask8er
    September 25th, 2012 at 07:24 | #3

    What is drawdown?
    What is drawdown?

  4. LibertyFX
    September 25th, 2012 at 07:24 | #4

    Hey Dan I’m …
    Hey Dan I’m considering what you’re doing but rather than low funded it will be for the working poor. Call me a crazy MF but the future of the middle class is personal trading.

  5. dalesalsa
    September 25th, 2012 at 07:24 | #5

    That way one 40 pip …
    That way one 40 pip trade will get you $400 instead of just $4 and you can get some real money to enjoy and pay for stuff and still be well within your money management principles.

  6. dalesalsa
    September 25th, 2012 at 07:24 | #6

    Very well said. …
    Very well said. Although with FOREX you can actually start with a ridiculously low account balance because you can trade 1000unit lots with most brokers. That makes each pip cost $0.10.  So you could start with 1000 or $500 and a 40 pip risk trade (which happen many times) is only $4 BUCKS. But your profit may be 40 pips so you will only get $4 profit. Increasing your account EQUITY IS MOST DEFINATELY YOUR PRIORITY!!!

    Omar

  7. AirelonTrading
    September 25th, 2012 at 07:24 | #7

    Nope. Nor will I, …
    Nope. Nor will I, until BAC is out of business. That one is based off earnings and dividends.

  8. VivaMydick
    September 25th, 2012 at 07:24 | #8

    hey I just came …
    hey I just came back from the gun store . I have never seen a waiting line like this even at Dunkin Donuts shop .People were waiting outside trying to get in . Go to your local store and see for yourself . They sell guns like hotcakes . I wonder why ? 🙂

  9. bill1611
    September 25th, 2012 at 07:24 | #9

    thanks -interesting …
    thanks -interesting video

  10. mouljran7
    September 25th, 2012 at 07:24 | #10

    first viewer this …
    first viewer this time 🙂
    as always thanks for the info.

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