I’ve been studying forex and started using a practice acount with Oanda.
I am using the Cowabunga trading system slightly modified and adjusting it along the way.
My questions are
What’s the best way to practice with the forex demo? For instance if I’m using the demo for a couple hours a day with the EUR/USD, what should I focus on, goals, etc?
I was thinking of getting started with a couple hundred dollars after using the demo but only doing a 50:1 leverage (maximum Oanda allows). Then I was planning to gradually build my capital up to a $1000 until I could get into higher leverage accounts and trade from there. Anyone done similair to something like this?
You shouldn’t really focus on anything… Just trading the demo account the same way you would trade real money!
That’s a big mistake that a lot of people make on demo accounts… They focus on one aspect of trading (usually the trading system) and totally ignore money management and trader psychology because “I’m not trading real money.” Then they open up a live account and lose big time!
As for your second question, I’m not sure that you truly understand what leverage is. Your account size has nothing to do with your leverage. You can have a a $10 account with 500:1 leverage, or a million dollar account with 1:1 leverage. The two things are not connected in any way.
Maybe if you can explain your question with a little more detail we can try to clear up your confusion.
The only thing you should ever be focused on is making good trades. That doesn’t mean making winning trades. It means executing your plan every time.
I was thinking of getting started with a couple hundred dollars after using the demo but only doing a 50:1 leverage (maximum Oanda allows). Then I was planning to gradually build my capital up to a $1000 until I could get into higher leverage accounts and trade from there. Anyone done similair to something like this?
I’m sure a lot of folks have ramped up their leverage when they started feeling good about their performance - and quickly proceeded to blow themselves up. No matter the size of your account, you have basically the same risk management philosophy.
Regarding the 2nd question I was referring to the babypips article that describes the biggest killer of new traders is leverage and not having at least a $1000 in their account.
However since I am low on capital in the beginning I was going to put a small amount in such as $250 and then only leverage it 50:1 in order to counterbalance the risk that goes along with huge leverage without a lot of capital to back it.
regarding account size. I think it’s a mistake to recommend someone start with any specific amount such as at least 1000. If you feel like you have to save up to open an account then you are starting too big. The best thing I did is open a $50 account. Why? because I lost half of it before I started breaking even on trades. Can you handle opening a 1000 and loosing half of it before you start to get good enough to start increasing it? Well that’s something only you can answer. I don’t like plugging a specific broker sounds like advertising but the only one I’ve had experience with is Oanda and with them you can trade as little as 1 unit of base currency. I dropped down to about a tenth of a microlot till I started getting the hang of things.
speaking of Oanda they don’t have the best charting software, get a free demo account where you can use metatrader, it has much better charting abilities and more user friendly, The only thing I like about Oanda charting is you can click and drag your stop loss right on the chart.
so in a nutshell, start small and size your lots accordingly.
well that’s the best advice I can give to noobies, I speak from experience… I are one
Yeah, I hate to say it but Babypip’s is just plain wrong! It should say “the biggest killer of new traders is USING too much leverage.” Just because your account allows you to use 500:1 leverage doesn’t mean you have to do it. It’s just like a credit card. Having a credit limit of $100,000 dollars on a credit card doesn’t mean you have to run out and spend it all.
What I’m saying is that lowering or raising your leverage is not how you manage risk. The two are not in any way connected, other than the fact that you [B]can [/B]risk more on a high leverage account. Just having a low leverage doesn’t mean that you won’t risk too much.
And TalonD is right. You can be just as successful with a $1 account as you can with a $1000 account. Assuming you’re measuring success by the rate of return, of course, and not by dollar amounts.
I generally only use some basic measures right now…MACD, RSI, retracement levels, stochastics, so Oanda seems to work pretty well for me right now with the charting software.
I’m focusing on short term trades on the 30 minute chart, and using the 3 Hour chart for the main trend, and referring to shorter term charts like the 5 minute chart to not get caught by false signals.
My ideal goal is to swing trade and be able to set up my entry points, stop losses, and profit targets so that I don’t have to be sitting at my screen the whole time.
Oanda has very short term charts too like the 1 minute chart, but I find that they move way to fast for me at this point, and there’s so much noise in the chart.
One good thing I’ll say about Oanda charts is almost instant execution of orders. I have an Alpari demo account on one of my computers and it can be several seconds between the time I click a button and the time that the order is confirmed. That can be disconcerting if you are seeing price move against you and you want to get out quick!
