Friday, June 1, 2012

Preservaion of Capital

There is a famous saying:

"He that fights and runs away, may live to fight another day; but he that is in battle slain, will never rise to fight again. " by Tacitus

For Traders, Preservation of Capital is of utmost importance. If we miss a trade, or exit a trade early, or get stopped out, then nothing is lost. We will take the next trade, and many subsequent trades, with prospects of profits.

But, if we lose our capital then there is nothing we can do. We will have to stop trading altogether. We are out of the business.

Preservation of Capital is essential for traders.


Nivas said...

Very well said!!

G M RAO said...

I am following Sudarshan to understand trading dynamics. Also, I do my own study. Earlier I was not using stop losses. Now I use. Or I hedge them and go with trend without shame. I don't want to be right. I want to be with the market trend that puts money in my pocket.

Jitender Yadav said...

Respected Sir
I had this experience many times that the markets would touch my stop loss point and than reverse direction. It frustrated me so much that instead of putting stop loss point in the system I started having a stop point in mind. Now as if this was a ploy of the market to trap me, when the markets would reach that mental stop point instead of reversing it would continue to go against me, I would give them some more room and than some more and the losses just compounded. In this process I lost as much as I could not have lost while being stopped 10 times with those initial hard stops in the system.
Now I have again started placing the stop order in the system. Yes I continue to get stopped but the losses are within limits and I take them as the cost of doing this trading business. Successful trading is determined by how well we manage our losses.
Your Fan
Jitender Yadav

pranav.kulkarni said...

Dear sir,
Just want to say you that you are the best in the business. How could people write such comments.( that you dont know anything about market). But, would like to request you to ignore such comments, if by any means you are hurt. we respect you from bottom of our heart and thank you for sharing your views, ideas, strategies etc. You are a mentor in true sense. We remain your sincere disciple!!!
thanks and regards,
pranav kulkarni