A little guidance please

Beginner Questions
1

I have been looking at forex trading and in the process of training with a demo account. , I do however have some questions and would really appreciate some pointers.
My strategy would be daily and looking to close things off at the end of the week.

  1. Which platform would you use? I would like to use one I can become familiar and stick with.
  2. The old question of leverage - if say as a beginner I wanted to test out my theories once I feel comfortable, what amount of leverage would you suggest. I would use a start balance of about £250. Also with this amount and using leverage I am trying to understand how much I would expose myself. What I am trying to say is can I end up loosing more than the £250?

Any additional suggestions would be very welcome

Thanks mark

2

if you’re based in UK, you have a lot of options. personally i like the Swiss guys (Duk).

levarage… ah, the big misunderstood term. just use the following rule: position size should be NO MORE THAN 10 TIMES larger than your balance. when learning, make position size = balance. or even smaller. that’s all you need to know about leverage. unless you’re a cowboy or just pissing in the wind, position should NEVER be more than 10x of your balance.

oh, by the way, that 10x is a good rule of thumb for day traders, so a few trades a day, lasting from 30min to 2hrs per trade.

the longer the trade duration, the smaller the position. don’t ever forget that! don’t use a tiny position for scalping, it’s pointless. and don’t use a 10x position for swing trades, it’s too risky.

leverage guidelines:
day trade = 10x max
scalp = up to 100x if you really want to (i don’t scalp, too rapid for me)
swings = 1x most likely (i’m not patient enough for this)

3

Thanks for the reply, I’m still confused about leverage.

So if what you are saying is use 10x leverage and I have a £100 fund, if I lost the lot would I loose £100 or £1000?

Thanks mark

Sorry could you clarify the following “the longer the trade duration, the smaller the position”.

4

if you have a 100 balance, then if you’re doing day-trades, your position size should be 1000 or less. how much you lose would depend on where you put your stop-loss, but the premise is that for day trades, you’re not about to let your trade run for a few hours against you.

at 10x leverage, a 10-pip move (either for or against you) is a 1% change in your balance. easy numbers to remember! adjust as necessary for your own comfort. at 1x leverage, the same 10-pip move would be a 0.1% change.

this is all kinda rough, not exact. i’m used to USD balances and EUR/USD trades. being in GBP, the numbers might need to get adjusted by whatever the exchange rate it.

5

Without wanting to sound stupid could you clarify the following “the longer the trade duration, the smaller the position”.

Thanks mark

6

sure.

if you are intending to do fast trades, as in entry-to-exit in a few minutes (5min or less), then you can afford to have a larger position since during those 5mins when you are “in the market”, the market isn’t likely to move TOO far.

if you are intending to open a position on Tuesday, and close it on Friday before lunch, then you should keep your position small because during that time span, a LOT can happen and the market can move 300pips in either direction. and you don’t want each of those 300pips to be worth 10 quid because if they’re NEGATIVE 300pips, you’d be wiped out before Wednesday.

7

Ah you mean my leverage position

Mark