Sunday, 15 February 2009
Read? Negative Equity - Can you can survive out of it?
Walau! Wrote this blog post 10 years ago!
When you are forced to top up, it means that you now are forced to potentially LOSE MORE THAN what you have intended i.e. up to $50K. NOW YOU ARE FORCED TO POTENTIALLY LOSE MORE THAN $50K. Furthermore, you can't be sure what is the LIMIT of Potential Losses like. You are cornered to continue the Game of Trading with more money or GET OUT.
What if you liquidate your positions as you do not want to add more capital or have no more capital, your equity level will drop more and you have lesser ability to recover with a smaller equity.
So using MARGIN OR LEVERAGE is not only about controlling and understanding RISKS, people DO NOT often think hard enough about it. ARE YOU PREPARED TO ADD MORE MONEY TO CONTINUE THIS GAME? If yes, then margin or leverage, is not a bad idea too.
Experience in the market is not measured by years, but by decades of experiences of watching and hearing those horrible life stories of those (especially friends and relatives) under-capitalized market players without Angels supporting them got wiped due to listening or getting advices from those BIG BROTHERS or BROKERS. If you are forced OUT OF THE MARKET, then there is virtually NO way for you to recover. To recover your losses or paper losses, you have to be in the MARKET in time to ride on the recovery.
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