Am I limiting my potential trading?

Beginner Questions
#1

HI,

I have been trading on a demo account for a few weeks and have a quick question…I usually buy when the RSI hits 30 or below and sell when it reaches a 30 pip spread or above 70 RSI. I have been demo trading with a 1,000 Net Asset Value account with a 20:1 ratio I stop loss at 30 pips below and usually trade 10,000 units that equal to 1 usd. I trade Cable and Euro.

Am I limiting myself in my trading? Or is my caution justified? I look for the overall trend before entering in : 1 hour, 30 minute and 15minute. I usually trade in the 15 minute window.

Please let me know what you think! I would appreciate it.

#2

Not wishing to be flippant but please stay cautious, its the only thing that will keep you afloat in this market. While most people seem to recommend a 2% risk per trade I think this is way too high for most and personally trade 1/2 to 1% depending on market condiitons. This week is the former. For a $1000 account you would be looking at no more than a $20 loss which on a 30 pip stop is 67c per pip or 0.67 of a mini contract. So you are actually taking a much larger risk than most would recommend. It is also a good idea to set your demo account to the amount you would actually trade when you go live so you can get used to the figures. The leverage of your account is unimportant except in as much as you must cover your trades, it is the leverage of your total funds that is the issue which is accounted for by your calculation of trade size

#3

I agree with tonymand, if you are trading with only $1000 usd then you should be using a micro account. Is RSI your only indicator? It is good to keep your system simple but if you want to keep simple then you would do yourself justice by looking at candlesticks and support and resistance lines. As far as risk/reward. You should go to my post “lets do an experiment” and see the results I had just read the first and last pages.

#4

Thank you and I will take your advice and only trade 1% of my NAV. I use RSI and the ultimate ocillator also solatics. I use all three as indicators. I appreciate your advice.

#5

You can also move your stop loss indicator as you gain pips. I did that this morning, making a trade with USDCHF last night at about 1.1620. I had a 30 pip stop loss incase USDCHF continued to plummit, but I saw it was extrememly over sold and beginning to move back up. This morning I moved my “stop loss” three times to cover profits. I eventually put it at 1.1761, and shortly after USDCHF headed back down and hit my stop loss.

If I had just watched the RSI, I would have only made 30-50 pips, but instead, I continued to move my stop loss up to protect profits and let my profits run (as I’ve seen it said). Eventually I made about 140 pips … which was about a 10% increase in my trading capital.