Trading Plan - Standard vs Mini

Hi all,

Yet another newbie question. I have read through most but not all parts of the education program and have been on demo account for more than a month. I realized that there are much more that I need to learn, as I keep making mistakes even with my demo account.

I am trying to write up my own trading plan based on my trading style, emotions and learnings. In doing so, I have tried to leverage upon the information that I found in this forum and the experiences of traders here, which I must say have been very useful.

I gathered that I should always always start small with a mini account. ie $500 but what I still cannot figure out is what percentage of the equity shall I allocate for each trade?
Also, when would someone normally graduate into the standard account and what are some of the risks associated with standard account as compared to mini account and what are the pros and cons based on experience.

All advices in putting together a workable trading plan is much appreciated and welcome.

Thank you

first of all start with the smallest account you can, there are brokers out there who allow custom unit sizes smaller than micro. That might be the way to go, and scale up from there. Its all about % capital risk, I personally have never risked more than 1.25% on a single trade EVER. The max I can risk on my entire portfolio is 5% but i have only ever reached 3.5%. You should graduate to a standard account when the % risk is identical to what you were using all along. for example, if my rule was 1% per trade and i had a max SL limit of 50 pips, trading EUR/USD trading 1 mini lot my account would have to be 5,000 USD. Same type of trade but how large is my account need to be for a standard account 50,000USD. as you can see this is how we scale up using the same % risk as before, but allowing for greater position sizing therefor larger dollar profits.

IMHO 500 USD is way to small to be playing MICRO lots much less standard. 50 pips is on the larger side of stops but as you can see you will have to be quite accurate in your trades and obviously if your 1st trade is a loss you will no longer be able to take that position size without decreasing your SL.

here is a link to the babypips position size calculator play with it and find out for yourself how you should trade.

Position Size Calculator: Free Online Forex Position Sizing Calculator

MeiHua,

Thank you very much for sharing.
It certainly throws in some light as how to manage risk for most and the link is fantastic.
I am going to focus in EURUSD for a long while until I get my emotions and trading style sharpen.
What capital would you advise as to start off in your opinion based on your risk ratio?

Thank you again.

You said you demo’d for 1 month, did you find that helpful? if so keep doing it until you book constant profits. for me i couldn’t do it properly so i went live very quick myself. I would say take a small amount say 100-200 USD and put it in a broker like Oanda. They allow custom unit sizes and you will be able to risk 1% on all your trades. sticking to fiber is fine but the pair doesn’t matter as long as you use the calculator for every trade. then you will be within your risk parameters.

The truth is that I cant wait to start but I do recognise that I need some more practice before I go life. So far I have coping well with the demo and my obvious problem is over trading and hedging which I am quick to do and it isnt part of my trading plan.

For an amateer like me, thats a killer!! I am currently trading with IBFX.
Thanks

IBFX does not allow hedging if I am not mistaken.

Not with their American servers, they dont but with their Australian server they certainly do! Whihc is closer to home for me too!

You do not want to over leverage yourself more then 3:1, in fact you should only be using 1:1 leverage if your learning. What does this mean? 1,000 account trading 1 MICRO lot (1,000k) in contract size would mean that your $500 SHORT from being able to trade with no leverage. Which I would suggest if your just starting out. People use leverage when they want to 1) double the rewards once they know they have a profitable way to trade, or 2) gamble with big outcomes …. I’m guessing you want to fall into the first group which means you need $500 more in your account.