money management HELP!

[theunder18kid]

hi guys

I have being trading for some time now. After wining 1k in one day with a 4k account I got carried away after seeing another trading oppotunity which I thought would of make me 500 pips+, so I invest all my money and just left my positions there with a stop loose of about 20-30 pips per trade(I was trading against the dollar on 3 currencies.....) at the end of the day it turns out that the US released a positive news for its money and so I lost all my money..... after that I have being trading demos and wining some prizes in demo accounts. But every time I get some real money I always couldn't manage it because I never got more than 100 in prizes... which means I had to risk most of it in any trades I make. I win most of the times though but I always tend to risk everything in after a few successful trades. Anyways I'm going to deposite some more money into my account now after trading and learning for a year, but all I'm depositing is 1k which means I can't really stick with the 2% rule, is there any suggestions? besides deposite more money lol

thanks

[rhodytrader]

Originally Posted by theunder18kid

...I'm depositing is 1k which means I can't really stick with the 2% rule...

Why not? If you're using a broker who won't let you trade as small as you need to for risk management sake then you need to use a different broker.

[ForexNinja]

Agreed.

[havenoidea]

Originally Posted by theunder18kid

After wining 1k in one day with a 4k account

thought about how much can u affor to lose ?
consider FX is a business or gamable ?
so on....

[Trade It]

Were you profitable in demo? If not then why are you trading live? Also sounds like you need to change brokers.

Sorry to hear you lost all your money. Forex is not get rich quick.

[Black Knight]

Hi there,

Your mistake is actually a rather common one among beginners... it is easy to get caught up in euphoria after a string of wins, only to do something really silly and give it all back to the house. That's called "greed"... and greed & fear are what rule the markets.

You should enter a new trade because there is a reason to, and not because you just exited another and are "looking to trade something". The good trades will jump right off the chart right at you. If you're squinting, it's probably not that good of a trade. And, why would you be in 3 different positions all on the same side at any rate? That's over-doing it.

Try this...

For any given position, assuming worst-case and your stop gets hit, you should lose no more than 2% of your account equity. That's usually much less than most beginners are used to trading with, but it is sound money management (some systems even call 2% "aggressive", and instead suggest 1% or even 0.5% for starters). It is the slow, but steady way to profits. Those seeking "excitement" are better off in Vegas, at least there you get free drinks while you lose your money.

With this simple system, if you need to use more lots, you can use a tighter stop. If your strategy or timeframe requires a wider stop, then you need to use less lots. The formula is adaptive and scalable. You should also never have more than 6% of your account equity exposed as a sum of all your open positions. So, basically, if the stop on one of your positions gets moved beyond BE (break even), then you get to open up a 4th position. But if you're in 3 losing positions, you'd be forced to cut back your losses.

Good trading,

Black Knight

[theunder18kid]

I'm using a good broker but I dont really have more than 1k to deposite in....... not the broker its me lol maby I should wait untill I have more money?

[Black Knight]

$1k in equity means you can use 1 mini lot if your stop is 20 pips away (2%), 2 mini lots if your stop is 10 pips away. Not a whole "lot" of flexibility. My advice would be either to trade on demo so you can develop and build confidence in your system, while you take on extra hours at your regular job and build up your equity, or to find a broker who allows micro lots so that you can implement proper money management and strategy with the amount you have to work with. I know it's not the advice people want to hear, but it is the best I can offer. If you go in "gunslinger", you will eventually (but inevitably) just join that 95%, the ones trying desperately to trade their account back up to even.

Good luck,

Black Knight
fxKnight.com

[rhodytrader]

Originally Posted by theunder18kid

I'm using a good broker but I dont really have more than 1k to deposite in....... not the broker its me lol maby I should wait untill I have more money?

Nothing was said about whether the broker is "good" or not. They might be fantastic, but if you can't trade the size you need to trade then they aren't right for you at this particular time. Find someone that will let you trade smaller position sizes.

As for waiting until you have more money, why? So you can lose more? No offense, but your trading is clearly not stable right now - meaning you're results are all over the place. Why expose more money to the markets while you try to get yourself on the right track?

[Trade It]

Originally Posted by rhodytrader

Nothing was said about whether the broker is "good" or not. They might be fantastic, but if you can't trade the size you need to trade then they aren't right for you at this particular time. Find someone that will let you trade smaller position sizes.

As for waiting until you have more money, why? So you can lose more? No offense, but your trading is clearly not stable right now - meaning you're results are all over the place. Why expose more money to the markets while you try to get yourself on the right track?

Thats what I was thinking!