Quote:
Originally Posted by kagein
Very compelling post, but doest adding more lots mean taking on more than an uncomfortable risk per trade.
ok let's say you have a starting account of $1000 on 100:1 leverage
if i bought one standard per trade i would have no room to make any losses before i get a margin call.
Wouldnt buying more lots only be beneficial if you have a high starting balance.
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Yes yes yes! You can't add size without the account balance appropriate for it or without the emotional aptitude to handle those kinds of losses and gains. I am in no way suggesting you go out and over leverage yourself on your account. My rule of thumb is 500.00 per mini contract. As your account size grows, add on another contract, and so on. But at the same time, you can't trade 1 mini lot for the rest of your life and expect to make a nice income.
Playing big size isn't something you do when you start out... you stay small until you are earning 100% returns on your account. If you can double your account size, then you are good enough to add on another contract, double it again and add another contract. Start small and work you're way up. Its also the easiest way to start training yourself to handle the additional risk and reward of bigger losses and gains in a controlled manner.
I posted this up for two reasons.
1: That traders don't fall into the "I need massive pips to make a living" trap because it just isn't true and 90% of traders think that making more and more pips will make them better returns. The truth of the matter is it is probably putting them in more trades that they don't need to be in, ie more risk that they don't need to take.
2: That we need to understand where we are going if we intend to make a living at it. We need to have this in our objectives if we are ever going to attempt to get there. By understanding the overall goal of adding size to the equation we can better prepare ourself now for that evolution to our trading.
Cheers!