Does This Sound Like A Dumb Idea?

[Graviton]

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.

Yes, that’s exactly the way to look at it. This isn’t a get rich quick scheme, but it can be a get poor quick scheme. If you make $50 on $1,000 risked in a month, that is a 5% return in a month or a 60% return in a year with simple interest. Actually, compounding it yields about 79% increase. That is WAY ahead of the very best money managers in the world. It indicates you might be taking more risk than you realize. I’m certainly not telling you to make less profit. I’m just advising embarking on a very complete study of risk and money management techniques before proceeding with real money. Many traders have made great profits only to have them wiped out by a “Black Swan” event or several unlikely events in a row. Your good trading is making your money but your good risk management will allow you to keep it. Of course, that’s just my opinion.

[sharpturn]

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.

“Long-term profitability” this seems to be the way I need to be thinking if I am to tick over with micro trades…(until I can afford to gradually move up).

[sharpturn]

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…

I understand. A lot of this has to do with leverage. With a few hundred dollars in a micro account a person is unable to “go the distance” because they will not have enough cash in their account to cope with the continuous ups and downs of the trade…= a tight stop loss.

However, micro accounts are there to allow someone to gradually work their way up…as long as they are not impatient with their trades…right?

Or doesn’t it work like that?

[sharpturn]

Yes, that’s exactly the way to look at it. This isn’t a get rich quick scheme, but it can be a get poor quick scheme. If you make $50 on $1,000 risked in a month, that is a 5% return in a month or a 60% return in a year with simple interest. Actually, compounding it yields about 79% increase. That is WAY ahead of the very best money managers in the world. It indicates you might be taking more risk than you realize. I’m certainly not telling you to make less profit. I’m just advising embarking on a very complete study of risk and money management techniques before proceeding with real money. Many traders have made great profits only to have them wiped out by a “Black Swan” event or several unlikely events in a row. Your good trading is making your money but your good risk management will allow you to keep it. Of course, that’s just my opinion.

Even though at the time of all these trades I felt as though I was being really conservative after reading your post I realize that I doubt I would even place half of those trades if I was using my own money.

That means that in the early stages of the game I shouldn’t expect to many decent returns.
After reading a number of articles it looks like the way to go is like a tortoise…gradually compounding those tiny profits over time.

As the years go by the savings grow which means more leverage and hopefully a better chance of raising the profits.

I think I understand.

[d-pip]

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.

Hey Graviton, it’s been a long time! Great to see you popping in and posting on babypips again. I’ve been following your thread over on Forex Factory, it’s excellent! The information you pass along and your advice is always top notch.

thanks!

[Graviton]

Hey Graviton, it’s been a long time! Great to see you popping in and posting on babypips again. I’ve been following your thread over on Forex Factory, it’s excellent! The information you pass along and your advice is always top notch.

thanks!

Hi d-pip, good to hear from you as well. Hope things are going well there.

[ExtremeTrader]

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.

You are doing good, keep it up. BTW I know a lot of posts here already mentioned 3 months profit trade. But you can also go longer than 3 months. I would say about 4 to 5 months of consistency trades. Also, makes sure that you are averaging 90% (9 out of 10 trades) green within these time frame. If you can keep it 90% green in the last few months then you should be good to go on the real account. But do not rush into it (like I did). Especially when you feel that you are not ready.

I know things will be a lot different with a real account.

It is definitely a lot different, on the mental aspect anyway (for me). Treat your demo account as trading with your real money. See how it feels if that was actual real money lost to you. If you can handle losing a few big bad trades, and not compounding the problem by making more mistakes. You will be on your way to become a great trader.

[Hariz]

Hi Everyone,

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?

Any advice would be appreciated.

It’s not about “how much” return my friend. It’s about “how consistent of profitable trades” you manage to get compare to your losing trades. Actually, using a live account is not bad idea, but my advice to you is better to have a clear, complete set of your own trading plan. Trade using a demo account, and keep a log book regarding your trades. Analyse them weekly to determine whether your trade formula is giving you higher winning percentage; say 7 profitable trades from 10 trades per week. (You need to create another formula if winning trades are less than 70%). If you satisfied or comfortable with your trades using a demo account in 6 months or so, you can start using a real micro account. This is only my suggestion based on my own experience. You’re free to ignore it if this doesn’t apply to you.

And, NO. Your plan is NOT a dumb or a silly plan. I myself start with the micro account. (Those days I don’t believe in “internet” forex trading, LOL) Every trader is different in their way of trades. One cannot tell others to trade like him/her or telling others that he/she is doing the “right” way of trading. As long as you manage to trade “profitably” and “consistently”, you’re on the right track! Cheers!