A Petition to Change a Section of the Babypip's School

[phil838]

There is a section of the Babypip's school that, in my opinion, is giving new traders very bad advice. I'm referring to this page...

The Number One Reason Why Traders Fail in the Forex Currency Market

That page gives new traders the following advice:

No matter what the forex brokers tell you, don’t ever open a “standard account” with just $2,000 or a “mini account” with $250. The number one reason new traders fail is not because they suck, but because they are undercapitalized from the start and don’t understand how leverage really works.

Don’t set yourself up to fail.

We recommend that you have at least have $100,000 of trading capital before opening a “standard account”, $10,000 for a “mini account”, or $1,000 for a “micro account”.

So if you only have $60,000, open a “mini account. If you only have $8,000, open a “micro” account. If you only have $250, open a “demo account” and stick with it until you come up with the additional $750, then open a “micro account”.

I've highlighted the parts of the quote that I think are incorrect. I see at least one new trader every week that is scared to open up a live account with the $50-$100 they can afford because of this advice. They believe that such a small amount will hurt their chances of being successful, and I can't really blame them, since the Babypip's School says it will.

The problem is that it won't hurt them at all! If you open a micro account and trade the lowest lot size available, .01 lots, then your trade will have a value of one tenth of a cent per pip. Even with an account as small as $50 dollars this will allow you to open a trade with a stoploss of 500 pips and still be risking only 1% of your account per trade.

I think it's fair to say that most of the Senior Members of this forum would consider that a safe way to trade, so I really don't understand why the School suggests a minimum of $1000 to open a micro account??

What this suggestion is doing, from my observation, is causing people to open accounts with more money than they can afford to lose, or avoiding forex trading altogether because they believe they "cannot afford it."

The School is telling them that they cannot be successful unless they have at least $1000 to invest, but this is simply not true.

It's a strongly-held believe around here that most traders end up blowing their first live account. This is a belief I don't necessarily share, but if it's true I would much rather see a new trader open a $50 account and blow it up rather than save up $1000 (that they really can't afford to lose) and blow it up with a margin call.

So I'm hereby opening up a petition for the Babypip's Administrators to change the advice in the School and stop advising people to open live accounts with a minimum of $1000. Are their any Senior Members (or not-so-senior members) that will back me up on this one?