The Next Part Of The Forex Journey

The Next Part Of The Forex Journey - Trading Dispatch

Capital, capital, and more capital!!! The main issue when starting to trade and make a living from the markets. You know? To show off the flashy lifestyle with; the cars, the multiple homes, the luxury vacations to the Bahamas or Paris, whatever you fancy really.

I’m just kidding! I know not everyone is in this industry to show off a certain lifestyle. But back to the point of this article. Capital. What, where, how, when?

These are all questions I have asked myself along the journey and had to answer over time. So let’s get started.

What is trading capital?

Capital is the money you use to fund your trading account, often considered to be the money you have either saved up, gotten from friends and family, or even the money you take from your day job and invest as trading capital.

The thing with capital, or rather risk management, is you should only risk what you are willing to lose so that you aren’t emotional if ever you do lose that money. It’s the same when starting your account. You don’t and should never place all your eggs in one basket as Warren Buffett once said. Only risk what you are willing to lose, over a series of trades.

This also helps eradicate emotion and it helps you detach from the money and losing in general.

Where do I get capital?

There are many places to get capital from, and I’ve come to realize that 2 things matter when looking for capital. Its results and confidence. On some rare occasions, you may get away with just the one and not the other. So you may have confidence but not necessarily the results, or should we say the track record to prove that you can grow the capital.

 As I mentioned before, you can get capital to trade the Forex markets from your friends and family, this is an option that many people take or are fortunate enough to have especially if their families have extra money or if it was as a birthday gift.

You can get trading capital from working a day job for a while. By making sure that you save X amount each month to fund your account at the end of that month or a time frame you’ve set for yourself. This may require cutting on your expenses, refusing to go out for as many dinners in a month or even, if you aren’t much disciplined, putting in a fixed deposit account where it is deducted from your card as soon as your salary is paid out. That way you don’t squander in unnecessarily, but rather you know it’s going to something that could be of great benefit to you after some time.

Another place traders can get capital to trade the Forex markets, is from PROP Firms. With a PROP Firm, the only catch is that you would be trading their capital and from that, you would receive a commission monthly, according to your gains. This is also risky because if you do not make any gains in a month, this is also on you. The PROP Firm may have its objectives and not adhering to those objectives may be detrimental to your success as a Forex trader for that firm.

A lot of traders have gone down this route or the MAM (Multi-Accounts Manager) route where you manage different clients’ money according to their objectives and their required rate of return. Or some even prefer to go for the PAMM (Percentage Allocation Management Module) account where every month you receive a certain percentage. With some, it doesn’t matter whether the account grows by the required percentage or not and that is at the disadvantage for the client, unfortunately. However, these two options both have their own risks for the trader too and that is for each trader to do research on and understand both the advantages and disadvantages.

Where to on the Forex journey?

Remember I said that people get on this journey for different reasons. Well, what is yours? Why are you on the journey of becoming a consistently profitable trader? Is it for your family and friends? Is it to show off a lifestyle? Is it to create something much bigger than yourself and help others? What is your reason?

When getting capital you must understand that you are now somewhat managing a fund, your personal fund. No matter how big or small the fund is, it is still to be treated with respect because that is hard-earned money, and once again you’re putting your soldiers out for battle. No one wants to lose a battle!!

Understand the next step in your journey is growth. Growing your fund and being able to make a career out of trading the Forex markets and if you’re the type of person who loves to give back, then help others do the same. Create independence and wealth around you and remember the journey is never over unless you decide to call it quits!

If you’re struggling to find capital to trade the Forex markets, try out some of the options we’ve mentioned above, with further research of your own, and sooner than later you’d possibly strike a gold mine, who knows?!


Happy trading Traders!

Never give up on this journey!

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Emmanuel Maphosa

Emmanuel Maphosa

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