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    Thread: What are the disadvantages of poor Equity?

    1. #21
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      Default Re: What are the disadvantages of poor Equity?

      Poor equity have many disadvantages which we cannot afford to ignore, although the definition of having a poor equity differs from one person to another, if we have a small account balance, it does not mean automatically that our equity is poor because we can increase the capital with good money and risk management combined, however many forex traders don't see this as necessary, someone can have one thousand dollars and start trading two standard lot because he is confident about his his capital, poor equity can be improved to become something appreciable that we can be proud of trading, we could start small but we should never remain small while trading.


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    3. #22
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      Default Re: What are the disadvantages of poor Equity?

      Poor equity can result in frustration for most forex traders because the amount of money they have for trading is grossly inadequate for what they were hoping for, the main disadvantage is that it could lead to trading with greed in order to quickly make more money from the forex market that is where the different transactions that could end up with losses starts happening left, right and center.

      Poor equity cannot be the main reason why someone should just decide to be doing whatever they want in the forex market, due process still has to be followed when trading because that is how success is needed possible regardless of the amount in our trading account.
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    5. #23
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      Default Re: What are the disadvantages of poor Equity?

      Poor equity does not mean we are at a disadvantage in the Forex market, it just means that we need to put extra effort to increase it with money management, one of the disadvantage that people see in having low equity is when there are many things that you need money for are available and the cash to take care of them is missing, this can sometimes lead to pressure trading to meet up for the short coming, however, it is always better that we have a small profit insignificant equity that we took the time to grow than having so much that we could barely control our emotions. It is very easy to trade with poor equity with the mindset of making it huge in the long run than to use a bigger account balance and blow it.

      ---------- Post added at 01:47 PM ---------- Previous post was at 01:40 PM ----------

      Poor equity does not mean we are at a disadvantage in the Forex market, it just means that we need to put extra effort to increase it with money management, one of the disadvantage that people see in having low equity is when there are many things that you need money for are available and the cash to take care of them is missing, this can sometimes lead to pressure trading to meet up for the short coming, however, it is always better that we have a small profit insignificant equity that we took the time to grow than having so much that we could barely control our emotions. It is very easy to trade with poor equity with the mindset of making it huge in the long run than to use a bigger account balance and blow it.
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    7. #24
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      Default Re: What are the disadvantages of poor Equity?

      The truth is that poor equity for trading is very restrictive, as there are some things that you would have loved to achieve with trading that would be a very difficult thing, traders with poor equity have more losses because their account don't have the possibility of growth as it is being experienced by other, there are too many ways people with poor capital suffer in the Forex market, it is better to wait until you have a better capital to invest than to trade with that poor capital you have been able to raise, it is also good to have poor capital as a beginner because what's happening is that you are able to build this money into an account that you will be happy about, that is why we need to produce patience whenever we think about trading.


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    9. #25
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      Default Re: What are the disadvantages of poor Equity?

      In my opinion, it depends on our target. If you just want to play around, $10 is sufficient for your equity. For learning purpose, we can used demo account which can give a big equity.

      But if we want to trade for our living, we need a sufficient equity at least $1000 to earn around $100 per week. (strictly follow the money management).
      There are lot of disadvantages with poor equity.
      1) High potential of margin call (MC) because of greed. How long we want to trade with 10 cent and earn $10 - $20 per week. Our life expense is become higher and need more than that amount.
      2) Afraid to hold our position and quickly close the position when get profits. We hardly to accept the losses because it will shrink the equity.

      3) Demoralize our spirit on trading. Since the equity is low, we have to find the sharp entry and we will find it difficult. Market is not ours and it luck if we can get it several times.


      In this week, I joined the contest which organized by one of the broker. They gave $10,000 in demo account and only top 5 will get the prize. What I want to share is I feel confident to entry my position and the amount gained per entry is sufficient to cover my daily expenses. Sometime my entry float but it still within my risk/reward.


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    11. #26
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      Default Re: What are the disadvantages of poor Equity?

      Every trader or specially beginner enter into the market with really high expectation and looking market like a money making machine. So, if anyone had poor equity into their trading account that will leads huge pressure of generating high income. Even, due to small equity into their account leads to various problem:-
      Use of high lot:- A trader always want to create big profit from market by opening big lot size trades may leads to put under pressure or Margin Call at last.
      Over-Trading:- Creating trades one after another without waiting for right opportunity to may leads over-trading and fatal losses due low quality analysis.
      Lack of margin:- Small capital may also create problem, when their current trade running in floating loss and Good opportunity in hands but due lack of free margin not able open trade at right price action.
      Lack of Money management because this will require enough capital.

      Problem for a trader when he didn't invest wisely are:-
      Big losses into market
      Depression and anxiety due to past experience
      Under pressure to recover them leads to keep on adding more severe condition
      Emotions like Greed and Fear dominating their trades.
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    13. #27
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      Default Re: What are the disadvantages of poor Equity?

      Equity and debt are the two primary types of capital you can use to for your small business when you Raise equity capital you give an investor shares of stock in exchange for cash strawberry present and ownership position in your business knowing the benefit and drawback of equity capital can help you decide how much of it to use.
      NO REPAYMENT REQUIREMENTS :
      When you use equity capital you have no obligation to make interest payments or to repair qwerty investor initial investment Dept capital on the other hand required periodic interest payment and repayment of the borrowed principle all the you my distribute some of your profit as divided into equity holders you can skip this image is necessary disadvantages help your small business keep more of its profit and allow more standing flexibility.
      LOWER RISK:
      Internal a business that uses more equity that that has a lower risk of bankruptcy if a business suffers a setback and failed to make it interest payments its credited can force it into bankruptcy equity investor have no satellites they must without any potential down turn to be able to benefit when a business prospects for example resume your finances your small business with all equity and have a bad year investors might be disappointed but there only option is to home for improvement.
      OWNERSHIP DILUTION:
      With every share stock you set investors you dilute reduce your ownership stake in your small business because equity investor typically have the right to vote on important company decision you can potentially lose control of your business if you sell too much torque for example assume you sell a majority of your company's outstanding stock to raise money if investors disapprove of the company progress they might work out of leadership position and bring in new management.
      HIGHER COST:
      Although equity does not require interest payments it typically has a greater overall cost then Dept capital stockholder shoulder more risk from their prospective compared to creditor because they are lost in line to get paid if the company goes bankrupt consequently equity investor demanded rate of return on their investment you typically must give up most ok for a low price when you Raise equity to compensate invested for this risk.


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    15. #28
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      Default

      Hi hru ,there are many disadvantages of having a low equity in this business, good level of equity help us to hold our trades incase of loss ,mostly trades float against our entry level for more than expectations,in this situation having good capital can allow us to hold that loss untill it become a profitable trade,secondly we can enter further trades if we have a good setup and big trading capital


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      Default Re: What are the disadvantages of poor Equity?

      The Mini Forex account is not an imaginary account as some believe, but it is a real account that you can use in the trading process and you can open it through a trading company that does not need a large capital. You can open it with only $ 100. Some companies allow the starting customer to open a 10 This is the only drawback to the Mini Forex account. Through it the client can understand the nature of forex trading and help him to learn. Lots of skill Such as the speed of decision-making or thinking in resolving crises


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    18. #30
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      Default Re: What are the disadvantages of poor Equity?

      Poor equity balance is going to disturb the way a forex trader takes his trades because he will be skeptical about what trading opportunity to take advantage of or not, having a small equity is not am automatic tickets to failures though, there are traders who have poor equity but yet were able to work out something that made them very successful, forex is more about the kinds of mindset that we use to approach it.

      A poor equity can be used to trade and get trained emotionally before we enter an environment where live money is involved already, the smaller our equity the easier we can manage it. We can grow an equity over time as we make progress.


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