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Management of Capital, Safety-net, and Losses

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Management of Capital, Safety-net, and Losses

Management of capital, Safety net, and Losses are important not only for the beginners but also for the knowledgeable investors.

If you manage to apply the Money Printing Strategy correctly, your capital should grow consistently. The MPS defines all components of the strategy clearly. There is no place for the guesswork. Below you will find a certain number of rules and guidelines to manage losses as early as possible.

Management of Capital and Safety-net

Before investing your hard-earned money, you will need to apply the MPS by doing paper trading until you have a written proof of at least over 75 percent winning trades out of a minimum of 100 paper-trades. However and as you may guess, the more trades you do, the better. It is also essential that after paper trading, you do a minimum of 100 demo trades using real-time data to achieve a minimum of 75% winning trades.

For paper trading, you may use the TC2000 historical data. To use a random period, you select the DJ-30 daily charts, pick the cursor below the MS graph, move it toward the left, and place it somewhere. You will then see a daily chart of DJ-30 with historical data. From that day on, you can move the chart one bar in the future each time you hit the “]” key. By pressing the “[” key, you move the chart one bar back. By hitting the “Shift” and “]” keys together, you will move the chart each time one week in the future.

The prerequisite for paper trading is the recording of the results. You may potentially use an Excel sheet. You must also record the rationale behind each trade whether a winner or a loser.

Your Safety Net is set to a maximum loss of 2.95 percent (1 divided by 34) of your capital at any given time. Anytime you have lost 2.95 percent of your capital, you have to go back to school and do your homework properly by practicing the basics of the strategy again. You would resume trading after proof of successful paper trading and demo trading.

When trading, the above-mentioned flexible mental attitude is an invaluable asset. Whenever you catch yourself behaving differently, stop trading immediately, relax, start breathing again, refresh, and re-exercise the basics

Losing trades are an integral part of trading, exactly as corrective waves are an integral part of the wave principles.

Stop-Loss Orders and Maximum Amount of Losses

The Stop-Loss orders are executed each time the price goes up or down and hits the price of the Stop-Loss order. Before placing any order, the Open, Close, and the Stop-Loss prices must be predetermined. These are the minimum prerequisites for calculation of the Reward-Risk Ratio. We place an order only if the value of RRR is 5 or higher. If you are unable to calculate this ratio or use it with lower values, you may wish to stay away and refrain from trading unless you clearly know the consequences of such behavior.

Unless the support and resistance levels are clearly recognizable, the following amount of losses should constitute the maximum limits:
  • The ultimate rule for the maximum Stop-Loss price should be 1.13 percent (the ratio of Fibonacci numbers 1 to 89) of trading capital for each trade.
  • Any time you catch yourself having lost 1.82 percent (ratio of 1 to 55) of the open position, you must stop trading immediately and investigate the cause. This break should force you to re-practice the basics before trading again. This loss may well be due to wrong applications of the MPS, the TPS, or the OMS. It may also be due to fatigue and emotional trading. In this case, the best advice would be to quit temporarily trading and to take a well-deserved break.
As already mentioned, your Safety Net is set to a maximum loss of 2.95 percent (1 divided by 34) of your trading capital at any given time. Once you lose 2.95 percent, you have to go back to school, do your homework, and re-practice the basics of the strategy again. The resumption of trading shall be conditioned by proof of successful paper trading and demo trading before putting any more money on the table.

By using the Loss-Parking Strategy, Stop-Loss orders, and safety net, you will ensure that your portfolio will never suffer more than 2.95 percent of your capital. Anytime you witness any higher losses is an indication that you are violating at least, one of the MPS trading-checklist rules.

The price of the Stop order is ultimately determined by the level at which the support line is broken for a Long, and the resistance line, for a Short position. Again, the trend lines and the Fibonacci retracements determine the support and resistance levels.
Become your own financial adviser and trade based on your own independent trend predictions and trading strategy - 
not on untrustworthy, unreliable, and costly external advice.
In Money Printing Strategy, we highly value and respect our customers' trust that we shall not betray in any way, and take pride in our honesty and integrity. We believe that these values form not only the foundation of trustworthy relationships but  are also essential prerequisites for long term successful business, especially in the sensitive fields of wealth management, trend prediction, finances, investing, and trading.
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