Do accounts with smaller capital i.e. £2k need to trade on the shorter time frames?
My logic being that if I want to restrict my losses to 2% (I beleive thats about 80pips at 0.5 ratio) then trading on the day charts etc even when trend is going my way I could just get stopped out by noise (as from what I’ve seen 80 pip swings seem to be common in trends over longer timescales.)
Therfore do I really need to trade the 30 min or less charts to make a profit with this type of stop?
Apologies if this is a stupid question but as said noobie here. I’d be greatful for any informed advice.
There are no stupid questions. Just stupid answers. Okay, here is one stupid answer: Your capital should be as much that you can trade on the higher tfs. Particularly as newbie. In general, if you are at the edge of you capital, try to think what you want to get out of forex. Forex is a high risk market with a lot of uncertainty. Just investing your money in something not as risky and come back if you have the liquidity would be another stupid answer. Least stupid answer: Try to get a micro account and then you can use less leverage, lol.
With micro account I mean a broker account where you can trade in 1000 currency units. For instance you could traden then with 1 pip = 0.1 cent.
Buckscoder and Master Tang are saying the same thing. Although Buckscoder said it in much more confusing way.
The school of pipsychology says that if you have capital less than $10,000 US, you should get a micro account and buy micro lots. This is a concept I am just starting to understand, but the whole system is scalable, like the decimal system. 1 standard lot (100,000) = 10 mini lots (10,000) = 100 micro lots (1000).
As Master Tang said, timeframes have nothing to do with it.
Well, sorry to be unclear. As I said, there are just stupid answers, lol.
Regarding 1) You are right that longer tfs need more risk. Because usually the stop would be farther away from entry. On the other side, the longer tfs are more reliable and expenses on smaller tfs are higher in relation to gains of one trade.
As newbie stay on longer timeframes. As I said, them are more reliable and expenses are smaller in relation.
As general rule. That doesn’t say if you found the holy grail on the minute chart, don’t trade it. It’s however not likely, you will be better than others who tried already.
As noob you want to show yourself to not blow accounts. If you can show that to yourself for a year or so, then you can start with thinking to make a little money.
I was a forex noob and I still see myself as one, but I never blew any account. I’m in the market since 1.5 years or something like that. Now, more than 50% of other noobs I survived. Rather more than 90% or so I guess. The very reason for that is that I am looking for risk first and then for chances at the very end.
Micro lots are exactly right if you want to trade on the larger tfs with reduced capital. If you play on the daily or weekly I can hardly think of a stop that close as if you would trade on the hour chart. For that wide stop you want less leverage. A rule says not to risk more than 1-2%. So, that’s with a 2k account around 20-40 bucks or pounds or whatever. On the daily a stop is say 200 pips away. So, you can use then microlots to go into the trade at 200 pips away with 1 microlot or a 0.1 minilot. That would be then 1%.
Plus be aware that this rule of 1-2% is the maximum suggested size. I do not say you can not even use 10% size, but you would see very quick that it’s not worth to ruin your stomach plus your account. So, in the beginning, stay safe. If anybody starts driving at age 3 he/she is using a tricycle, later it becomes a bike and after several years after getting the drivers license a car might be the proper vehicle. It’s like that in trading. You don’t wanna start with a Ferrari which you bump at the next tree, right? :13:
