Trading Capital Definition – What is Trading Capital? | CFI LB

trading capital

Trading capital refers to the funds a trader has available for them to buy and sell various assets on the global financial markets. Without trading capital, it is not possible to be a trader.

 

Many brokers, including CFI, allow you to start trading with no minimum deposit.

 

A trader should never deposit more money to their trading account than they would be willing to lose.

 

The 1% rule is a rule of thumb which many successful traders follow. This rule advises that you should never put more than 1% of your trading capital into a single trade position. Say, for example, you have $1000 capital in your account: you should not put more than 1%, or $10, in your position in any given asset you are trading. If your trading account balance is less than $100,000, the 1% rule is a good guideline, though some traders with large balances can afford to go up to 2%.

 

Remember: as your account balance dwindles, so does your position in the market. So, the best way to keep losses at bay is to stick with a risk below 2% so that you do not lose a huge amount of your trading account on one or two trading deals that go badly.

 

The expected return is the amount you expect to gain if all goes well, as well as the amount you expect to lose if the trade turns against you.

 

Calculating your possible loss or gain from a trading deal is an important technique. It helps you to rationalize your trade by forcing you to think through them carefully and enables you to compare different trades systematically and select the ones with high profitability potential.

 

Key takeaways:

  • Trading capital refers to the funds a trader has available for them to buy and sell various assets on the global financial markets.
  • Never put more than 1% of your trading capital into a single trade position.
  • If you would be unable to cope with the potential loss, do not take the risk.
CFI Financial Group is an award winning global financial markets provider with over 23 years of experience and regulated entities in several jurisdictions, focused on offering impeccable execution and trading conditions including very low spreads, professional services, dedicated support and powerful tools.
CFI Financial Group has regulated subsidiaries in
London • Larnaca • Beirut • Amman • Dubai • Port Louis
Credit Financier Invest - CFI LEBANON
BDL no. 40
1019238,
Ellipse Center 3rd floor, Charles
Malek Avenue, Achrafieh

CFI provides execution-only services and does not provide any investment advice. To make an investment decision, you cannot rely on the content of this website, or on any information, opinion, report or other materials (“Information”) you receive from CFI, or its representatives. Such Information is general and does not consider your objectives and your financial situation, thus they shall not be considered in any way as an express or implied promise nor a guarantee of any profit or limit of loss. CFI shall not bear any liability in case you used or relied on such Information. Please ensure that you make your own research and seek independent advice if necessary.

Forex and CFDs are leveraged products that incur a high level of risk. A small adverse market movement may expose the client to lose the entire invested capital. The majority of retail client accounts lose money when trading in CFDs. Please be aware of trading risks and that you could sustain a loss exceeding your deposited funds, even if a stop loss is used.

CFI Lebanon is regulated by the Banque du Liban and the Capital Markets Authority

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