Fund planning for trading is crucial before you decide to trade and buy the stocks you like. Planning a trading fund sounds trivial. However, did you know that many traders do not plan their funds, so when they lose they inject funds. The result? The loss is getting bigger. When you get a lot of money, you are immediately happy, keep injecting more funds The result? Fortunately, it's a loss because you forget about technical analysis.
"Then what should I do, sir?"
You have to do a fund plan. You need to pay attention, especially for those of you who are planning to enter the world of capital markets, so that you don't get caught in a big loss because you don't have a fund plan. Okay, I will discuss more in planning funds for trading.
First, if you want to trade you have to use free funds. Meaning? This means using funds that are really idle or not used for anything. Funds for daily needs should not be used for trading. This will make your mind uneasy. Moreover, if you experience a loss I guarantee you will be increasingly uneasy.
Second, what is the ideal amount of funds that I should set up for trading? My advice: preferably, the funds you prepare for a MINIMUM of 5-10 million. But it would be nice if you could add more funds than that (depending on the ability of your funds too). If in my post: Minimum Capital for Stock Investment, then the minimum capital is only Rp. 150,000, but perhaps you are asking what Rp. 150,000 is for? Well, if you put in 5-10 million, your profit can be maximized. See the illustration below.
Suppose you enter funds for shares of Rp. 15,000,000. You plan to diversify your shares into 3 shares, with details of 1 share you enter IDR 5,000,000. See the post: Diversifying the Right Stock (Part III). So, the illustration is like this:
So your total profit for 3 transactions is . If you make 6 transactions in one month and you can make a profit of around 775,304, then your profit is Rp. 1,550,608
Another illustration, suppose you enter IDR 10,000,000 for trading. You want to put in 2 stocks. For 1 share, it is worth Rp. 4,000,000 and for 1 share, it is worth Rp. 6,000,000. Illustration of the advantages:
If you trade into 2 stocks and make a profit, then your profit is IDR 530,000. If you make 4 transactions and a month, then your profit will be IDR 1,061,612.
That is, if you put in the funds of Rp. 15,000,000 and Rp. 10,000,000 the profit you get is good enough as additional income. If you can put in more funds than that, and you trade for one month, the profit can even be for daily needs. But the problem is that we don't always make profit, right? What if you lose, the profit can't be that big?
Right. In fact, in stock trading, losses are very difficult to avoid. Read the post: Can I Make Big Profits from the Stock Business? The illustration that I described earlier is actually to show you that this is the "ideal" fund for trading in terms of the profits it makes. But you need to remember that the more funds you put in, the higher the profit rate, but the greater the risk of loss you will bear if the stock price drops. Remember the investment principle: HIGH RISK, HIGH RETURN. If you trade and keep losing, then something is wrong. That means you need to learn more.
"Then, when should I inject funds again?"
My advice: inject your funds every NEW YEAR CHANGE.. See my illustration:
For example, you previously entered funds for trading of Rp. 15,000,000 for 2015. So, you inject funds again, 50% of capital or 75% of capital in 2016. If you want to inject funds again, then you inject funds again in 2017 And so on. So the calculation:
Investment in 2015: IDR 15,000,000
The 2016 injection of funds is an additional 50% of the capital: IDR 7,500,000
Fund injection in 2017 an additional 75% of the initial capital: Rp11,250,000
No matter how big the profit you get, you are PROHIBITED to inject funds if you haven't entered the new year. If you lose, you can't inject funds. If you lose, it means you need to evaluate and learn again so that you can make a profit. If you lose and you are getting greedy to inject funds, what happens is that your losses are bigger. Many traders have experienced this.
You ask: "Why do you have to wait for the new year?"
So that you learn to control your emotions. Trading is not just about funds, it's also about controlling your emotions. Control your emotions so that if you get a profit, you won't be reckless and greedy by continuously adding funds, eventually you forget to do the right analysis and end up losing.
Control your emotions so that in case you lose, you are not emotional by adding funds, but if you lose you learn to evaluate and learn again. All of that is very important. Fund planning for the right trade you must do first before deciding to enter the stock market.
