Please give an example or illustrate it so that beginners could understand the principle. There are many novices among us.
upendragoa.
Let's assume that a trader wants to earn atleast Rs. 20,000 per month from trading. With a capital of Rs. 10,000; it would mean 200% return per month which may be achievable but is not highly probable. Hence, if that traders' system suggest that he can earn 10% return per month, his minimum capital should be Rs. 2,00,000 (20000/10%). If the expected return is only 2% pm, his capital should be 10,00,000.
That is the criteria to be applied for calculating the minimum capital required.