hi,
if i open an account with 100 dollars
risking 2% of 100$ = 2$
so if my TP and SL is 20 pips
then … my pip value should be .10 cents , so i’ll simply open a position of 1000$ . [ levarage of 50:1 or 100:1 ]
i hope you get what i mean
Is this good money management ???
how many positions can i open simulataneously ??
what kinda levarage should i use ??
is the 20 PIP SL/TP sufficient ??
On the whole, yes, that is good money management
All these other questions you have to work out for yourself and if they are right for the system you use
Well your leverage should be based on your capital risk/trade. So if you’re risking $2, 2%, you want as large a position such that a SL would only be a $2 loss.
The leverage will be what it will be.
As to a 20 pip SL, depends on what strategy you’re trading. If you’re a day trader scalping off 15 minute charts, then sure, 20 is probably fine.
However, I would advise against scalping, since its very difficult to do succesfully.
Succesful traders seem to be those who trade on longer time frames, 4 hr and daily time frames. This is called position trading and it involves catching a new trend early (or an strong existing one) and riding it for large profits.
It requires larger stops, ( I use about 200-300 pips if the trend is new).
As to how many positions? Well as many as your system tells you to do, BUT make sure you protect yourself from margin calls.
For example, calculate how much margin you use/trade and then add the $2 SL/trade and then divide your account by this and round down.
This is the maximum number of full trades you can enter simultaneously without risking a margin call. You can also enter a partial trade, meaning smaller than a normal trade but make sure to run the numbers so your account balance will always be above the minimum margin requirement.
i usually hold my positions for a few hours .never more than a day … if the trade goes against me i usually close the position after 12-15pips if i am at my desk or it hits the SL of 20 pips … … is this BAD ???
and if the trades goes in my favour … ofcourse i let it run …
so my question is … is 20 pips bracket too little a wiggle room ???
2 hours is the maximum for me… i can’t stand holding a position longer than that…
There is nothing wrong with a 20 pip stop if you feel comfortable with it and suits your trading style. I personaly like to have one a bit bigger, normally about 50 pips or near a support/resistance area.
My guess is since your asking if 20 pips is bad or to small, then maybe for you a bigger SL would be good.
How is your system currently work as it is? If you win more trades than you lose then maybe its just a psychological thing you have with the losing trades.
But if you are getting stopped out alot try increasing it. If you double your SL and TP and half your trade size then your still risking the same amount but have twice room for spikes
Hope this helps a little:)
Regards
Simon
thats exactly what i was thinking simon …
and ichigo … yeah i cant hold a position more than 15 minutes if i am looking at the screen … thats why i tried scalping at first … but that dint work out … so after i open a position … i just switch off the monitor for atleast 20 minutes … and that really helps to a lot …
allright … my next question is regarding levarage
i’ve read a lot against … using excessive levarage … but since my account is tiny … ie $100 … and if i use 500:1 levarage … my locked in capital will be pretty low … something like 2$ per position so then i’ll have 98 dollars left and since my pip … is only 10cents… that gives me more wiggle room … so i can widen my SL to 50 or 100 right !! so … whats wrong in using high levarage ??
bump!!!
Leverage is irrelevant as long as you use proper money management. Your stops should be the exact same regardless what leverage you use.
The way your thinking is that because you have more available margin in your account, you can use a larger stop. I would not recommend this, if your strategy is to risk 2% then make it 2%, not 4 or 6 just because you have margin available. If you don’t develop good trading practises now, it will be pretty hard to break your bad habits later.
Good luck