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Wednesday, November 19, 2008

Money Management: Drawdown and the Low Funded Account

"Thinking will not overcome fear but action will." - W. Clement Stone

As I mentioned the other day here on the blog? YouTube contacted me, after blocking one of my money management videos. I was under the impression that I was allowed to use under 30 seconds of any song, under the 'fair use' clause. Well, YouTube disagrees. I did not store those videos anywhere else; such as at Google Video, Metacafe, etc. Therefore, I will re-do these very important videos. At the same time? I get to improve the video quality. If you have not seen them yet? This is the most important series of videos that I ever made.

So here is a repeat of the Money Management Entry: Drawdown and the Low Funded Account.

For better or worse, people who want to get involved in Day trading, the stock market, trading and investing with futures options or the Forex, perhaps they start off adequately funded, and through poor money management - they end up losing it all very quickly. Or perhaps ones look to get started, with a minimal account.

What to do?

Well, they can try to trade their way back to a break even point immediately. Committing the same mistakes that got them to that point? Or, they can start to look at what drawdown means to a low funded account.

If you have a low funded account, you have already violated a money management principle. Namely, to have an adequately funded account. Therefore, regular capital infusions is VITAL to the success of the accounts.

We discuss this in the following vlog entry ...

(Video Included. If you're seeing this from Email subscription? Click on the Title Link in the Email to View the Video ...)



Something that is necessary when implementing such a strategy? Is patience! You must be patient! You are not going to 'get rich overnight'. But you can 'accumulate wealth'. You can increase your trading accounts equity by adding capital, and adhere to money management principles.

I'm going to continue replacing these older money management videos. But I will be interspersing them with newer content videos over the next few weeks ...

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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. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

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