A trader's weird thought about capital management

[Dr.Bitcoin_Strange]

How is it that a trader would think that the reason he is blowing accounts is because he only has a small capital and so doesn't make it a priority to protect that capital, the reason being that it's an amount that he can afford to lose? Is it not weird that someone who cannot manage a small capital trading account would think that if he gets hold of an account with big capital, he can manage it very well and make profits consistently without blowing the account? Do you also think capital is your problems and reason why you are not profitable?

This is an argument that sparked among traders arguing why each of them is not yet profitable. While others gave meaningful and agreeable reasons why they are not profitable, one of them insisted that he is not profitable because his capital is so small and he doesn't care if he loses it or not, and that's why he is not profitable. He said that if he is trading a big capital account like $1k, he can consistently make profits without blowing the account. Note that $1k is considered big, because he is trading with very small capital, not even up to $100.

So, what do my fellow traders think about this? Don't mind the title if you don't think it's weird; it's just my opinion.

What I personally think is that if a trader lacks discipline or proper risk management in managing a small account, that indisciplined attitude and poor risk management will still affect them even if it is a big account they are trading. I think one should be able to manage even a $100 account very well before they can handle a $1k or bigger account.

[Donk1]

Anybody who has such a mindset should probably just go back to trading with demo accounts, because they lack any significant knowledge on trading. That's why folks often get some crypto terms wrongly due to a lack of effort.It's weird because our mindset plays about an 85% role in our analysis, strategy, and risk management If a person thinks his issues with the market is his low capital, then I will insist they increase it and find out as that would be like a way of confirming their logic.the crypto world often works in two distinct ways, which is you can either learn step by step, or you can learn the hard way. Either way that doesn't change the fact that the person is willing to take the risk in trading So if their will is strong enough then they will continue their journey through experience If it isn't then they probably will give up after a significant loss......

[Wiwo]

What I personally think is that if a trader lacks discipline or proper risk management in managing a small account, that indisciplined attitude and poor risk management will still affect them even if it is a big account they are trading. I think one should be able to manage even a $100 account very well before they can handle a $1k or bigger account.

Traders that have huge capital as risk management balance are likely never going to blow their trading account, because their available unused balance will push the liquidation price very far, almost impossible in the short term or even in a long position.

The logic for me is to open with a small amount as my capital position amount, leaving the remaining money in the balance, not to open multiple positions and avoid greed or rushing to make decisions when the market goes against my current entry price, with zero use for take-loss (SL).

[letteredhub]

How is it that a trader would think that the reason he is blowing accounts is because he only has a small capital and so doesn't make it a priority to protect that capital, the reason being that it's an amount that he can afford to lose? Is it not weird that someone who cannot manage a small capital trading account would think that if he gets hold of an account with big capital, he can manage it very well and make profits consistently without blowing the account? Do you also think capital is your problems and reason why you are not profitable?

The popular saying that if a person can't manage in small things he definitely can't be able to manage when given bigger things/roles. That's statement do applies so well with trading. A trader who takes big risky trades with a small account, such trader would definitely not stop at taking much bigger risk when he is given a large account to trade with. Trading management and discipline has to start from your little beginnings because you can't start to exercise some discipline when you're already aware you're in charge of a large account, the temptation to blow the account becomes much at that moment than before.

[Zaguru12]

Traders that have huge capital as risk management balance are likely never going to blow their trading account, because their available unused balance will push the liquidation price very far, almost impossible in the short term or even in a long position.

I think I will agree with you only if you actually put it like if the trader with such large capital actually has proper risk management probably that’s what you mean and yes with proper risk management you are bond to have more funds even after series of losses to actually avoid liquidation, but without proper risk management or even knowledge about trading you simply just gamble you will definitely blow that account up in a short period of time. We have read reports of traders actually blowing up a $1 million account because of lack of risk management.

The idea of even using balance to actually push your liquidation away is actually something I don’t quite agree with because the idea is more like gambling, simply use little amount to trade and not all because market volatility can sometimes be too high that even some high liquidation price can still be triggered

[Pandorak]

What I personally think is that if a trader lacks discipline or proper risk management in managing a small account, that indisciplined attitude and poor risk management will still affect them even if it is a big account they are trading. I think one should be able to manage even a $100 account very well before they can handle a $1k or bigger account.

You’ve explained it very well.

It’s strongly discouraged for traders with this mindset to continue trading, because from the very beginning their focus is solely on how much profit they can make, rather than on building good habits and gaining experience in managing their capital.

Essentially, when starting out in trading, having knowledge is a must for a trader, not just knowing how to buy and sell, but also understanding technical analysis. However, there’s another aspect that’s just as important (money management). Someone who wants to enter the world of trading shouldn’t jump straight into using real money, instead, they can use a demo account to backtest their win rate. Once they feel confident, they can start with a small amount of capital to see if it grows or if they end up facing a margin call or liquidation. Only if they successfully grow their capital should they gradually increase it.

[Sanitough]

Trading losses do not mind if you trade with big or small capital, but if you are trading with a limited capital, most likely you will encounter bigger challenges that can make winning harder. With limited diversification and pressures that grow overtime on how to make your trades profitable, these will contribute to fast losses and difficult gains.

However, skill matters more than size. If you have good strategy, strict discipline and proper risk management, trading with a small amount can still make positive and profitable gains. While those who lack strategy and has no risk management applied, even with huge capital, trading will surely end up as a loss.

[mirakal]

While I may agree that trading with small capital can have bigger chances to blow their account, but most traders blow their account due to the reason of lack of trading experience and tested plans, poor risk management and discipline, and because they fall as emotional traders. And when they suffered from initial losses, they don't trade like they learned from those losses, but they end up with revenge trading which should be discouraged when in trading.

Capital management is crucial, but it does not guarantee profits in trading. Instead, what will make us profitable is how we execute our trades, how we adapt risk management, and how we avoid negative emotions that could easily lead us to lose inevitably from trading.