Please bear with me because I am totally new to Forex and any type of trading.
I am learning with the Babypips School but still have a long way to go. In the meantime I am also playing around in a practice account.
I treat this practice account as if it was real so I basically never spend more than I actually would in real life. I figure that would give me a better idea of what to expect regarding either gains or losses.
At present I would start off with a micro account and so I basically trade with “micro” practice money.
My plan is to open micro trades on a daily basis aiming for small gains rather than the “big win”.
So far I have had quite a few trades in the green, some make $5, some make $10, etc. As soon as they hit a number I am happy with I close to collect the small gains.
It may sound silly but over a week these tiny gains add up.
Yes, I do have to invest much more money for these tiny returns but it just feels less risky.
I mean I may invest $80 in a certain currency only to gain $6 out of it…but it is still a gain right?
Does this sound like a dumb plan?
Am I going about this the wrong way?
I wouldn’t go with any demo account. No matter how good profits you can make there it is not real and it can only give you a wrong directions. If you rally want to be serious and become a trader you should open a real micro account with some small deposit and you can practice there with your own money. Of course there is a risk to lose your money, but that’s the only real way to develop your real trading strategy by making mistakes and learning from them.
+1 to Rambo35 comment. Just keep doing what you are doing with your plan. It is your strategy and especially if it work well in a real micro account. You’ll be good to go.
I, myself, just got started too and started a small micro account to work with. Of course, between trading I get more in the red than green. But then may be I am way too aggressive, and trying too hard to get back my losses.
Hi sharpturn, seems like you already have a plan. That is great. But you might probably need a more refined one, with entry point, stops and targets. This is essential especially when your account grows.
The other two factors you want to take note and work on is your money management aspect and trading psychology. With micro lots, the psychology aspect might not kick in yet. But once you start trading larger size, it is money management and psychology that is going to play a large role in your success in trading.
Thanks for your input.
I get conflicting info from what I have read from others. Some say make sure you practice on a demo account first for a few months and others say don’t bother with a demo account and just take action with a real account.
I do agree with what you are saying but if I don’t really know what I am doing then chances are I would lose my money fairly quickly on a real account. This is why I figured I would learn as much as I could on a demo account, to understand the basics first.
This is why I opened a demo account first.
So far in the demo account I see a lot of green but maybe I am just lucky. I still need to learn a lot before I feel confident enough to lay out real money.
One good thing is that I think I am seeing that I trade in a certain style; very low risk…calculated. I hope to keep my risks low to medium when I eventually trade for real. Maybe throw in the odd high risk trade once in a while to test the waters.
Thanks!
So I need to work on entry points, stops and targets.
I guess all I do now is pick a currency that looks like it may be on the up on the graphs and then open a trade. I then set my stops so I don’t loose too much and create a “Take Profit” point.
If I see that things are on the up but may not make my take profit prediction then I just close the trade and collect whatever pennies I made.
Not even sure if I am doing any of that right but I do seem to have more successes than losses…although they are tiny gains like $6, $12…etc.
So you say i need to look into psychology as well. That sounds interesting!
Stay with the demo account until you have several months of consistent profit and are happy with your trading strategy.
Ignore anyone who suggests diving in with real money, they dont know what they are talking about
If you can’t be profitable 3 months in a row in demo, there is almost zero chance you can do it with real money. So why throw your money away? Keep good records and be honest with yourself. If you can make 3 months in a row profitable in demo, then only trade the absolute minimum live in a micro account until you can make three months in a row positive with real money. Just my own humble opinion.
I think that is something I should do. I have played with a demo account for about three weeks so I have a fair way to go. As I mentioned, I have seen more green than red so far but it is still early days yet.
I know things will be a lot different with a real account.
Out of curiosity, does it matter how profitable?
I mean, seeing as I make micro trades I make micro profits…a few dollars at a time.
Does that count as being profitable in Forex?
Yes, it matters. The top money managers in the world, those that manage hundreds of billions of dollars will make about 24% this year. That’s well above the average money manager which will make about 12% this year. So, if you are making about 1% per month on money invested, you are doing average and that’s ok. If you are making less, then you can probably do a little better, but a profit is a profit, and it counts even if it’s only $1. If you are making more than 2% per month, you might be taking too large of risk. Maybe you are not, but it’s something you need to be aware of and be careful of. How much did you risk in the month? Say, $80 per trade once per day for 20 trading days? That’s a total of $1600 risked. If you made $16 profit (1%), that’s about average, if you made $32, you are running with the best in the business. If you made a lot more then that you are probably taking risks that you are not fully aware of. The market has a tendency to make you aware of your risks in a most unpleasant way. I’d advise a careful study money management to avoid that unpleasantness.
Not at all! It sounds like you’re making progress, even if it’s a little at a time. Just focus on the process and what works for you or what you’re comfortable with, and work your way to longer-term profitability.
Nothing wrong with your plan. Small investments bring small profit and respective losses as well. But you are wasting you time playing with small amounts rather than earning money, managing appreciable risks, etc. Trading with < 100$ deposit doesn’t make a sense because applying to it substancial leverage you will quickly lost it, without leverage - messing around cents or in a best event - a couple of bucks…
Looking at it that way it does seem like I am making tiny gains per month.
On my demo account I would average around $80 per trade. I may create a few of those a week.
So, yeh at the end of the month the amount I would’ve risked may be $1000+.
If I add up my profits so far it would come to at least $50.
$5 here, $6 there, $2.50, here…etc, per day…it all adds up.
If I understand what you have written correctly, making $16 from $1600 is actually considered to be pretty average going…is that correct?
LOL…doesn’t seem like much profit does it.
I guess that is the reality of this.
Looking at it that way it does seem like I am making tiny gains per month.
On my demo account I would average around $80 per trade. I may create a few of those a week.
So, yeh at the end of the month the amount I would’ve risked may be $1000+.
If I add up my profits so far it would come to at least $50.
$5 here, $6 there, $2.50, here…etc, per day…it all adds up.
If I understand what you have written correctly, making $16 from $1600 is actually considered to be pretty average going…is that correct?
LOL…doesn’t seem like much profit does it.
I guess that is the reality of this.[/QUOTE]
Your profit is going to be relational to your account size, and $1,600 is absolutely nothing, therefore your profits are going to seem like nothing. This is why trading with small amounts often leads to burned accounts. Even though you can be making solid returns on a percentage basis, the actual profit is small, leading to impatience and riskier trades which inevitably blows up the account.
If you have a $100k (still chump change in this market) then you’ll be making $10k based on the same 10% monthly return. Sounds a bit better doesnt it?