I can understand taking a $100 dollar account and putting in with full leverage before the NFP.
It’s a fun “gamble”, that will either lose you 100 dollars because of the wrong way, lose you 100 dollars because of the wild swings, or if you’re lucky… make a nice quick return on your 100 dollars.
Even though the above may work from time to time. I don’t think it would be profitable. It’s just having fun gambling, but not trading.
No mentally stable person will do this with their whole account with real money day after day.
I can also understand phoenix bending the rules a little bit (up to 5%) because of his experience and risk appetite now that his account is back on track.
However this will not yield 20% a day consistently and the thought of making this a day after day goal is just a joke.
That’s an extremely goofy pipe dream that doesn’t figure in the win/loss ratio, human error and any number of other issues not mentioned. But, I’m sure you are fully aware of that.
However, even a fraction of that is a strong argument for starting a micro account and slowly building the account upon it’self, instead of saving up a large sum of money from a job AND THEN learning to trade.
Awesome!! That’s something I’ve been thinking of lately. The more pips you aim to get in one single trade, the more pips you have to risk (I guess), so the less the lots or minilots you can trade in order to keep your % risked at 1, 2, or 3%. The less pips per trade you target, the less pips you risk in your stop loss, and the more the lots you can trade.
So interesting point of view but what you expert traders think!
I know it’s a pipe dream. That’s the whole point of the post. (edit: forgot to add, it’s a daily percentage figure that does account for intra day w/l, human error etc., because at the end of the day you still leave with a 20% bump)
You don’t have to save a large sum of money to start trading. I am just stating to start slow with your low amount and deposit a little more every now and then as you learn.
By the time all your deposits add up to “real money”, you may have a little experience and realistic expectations under your belt.
But first…Have you looked into getting into it part time first?..it’s hard to judge from your post what your experience is so far. Did you demo with a $50K account and do really well?..if so, that’s definately NOT a good indicator of how it will work when starting out for real with only $250…otherwise, I recommend demoing with only $250…then you’ll know if it’s at least do-able.
A mini account with 200:1 leverage means for each mini lot you trade, you’ll use $50 of your deposit, so 2 mini lots will be $100, 3 will be $150 … most you could open would be 5 minilots with $250 deposit.
1 mini lot on avg is $1/pip …max you could earn with 5 minilots would be $5/pip.
On the good side, with 5minilots, you’d only need to make 10 pips, or 50 pips with 1 mini, per day which may mean you need to put on multiple trades a day to get your 50 pips in increments.
But on the bad side, if you used 5 minilots and price went against you, you could only withstand a 50 pip loss and then you’d get a margin call and that’s it…no more money. Of course if you only used 1 minlot, then you could withstand 250 pips loss before a margin call.
Those are the extremes, and there can be any combination of wins & losses & lot sizes in between there that will “just” keep you in game, never mind actually making that in profit per day.
So, before you go and quit your day job, make sure you know what your strategy is capable of in both wins & losses, and just as important, how many pips into the negative you’ll let it go before deciding it’s not coming back in your favour…remember you may only have a choice between 50 & 250 pips…
Then when trading real money, you need to trust it which is more difficult than it sounds.
"The more pips you aim to get in one single trade, the more pips you have to risk (I guess), "
And is a misunderstanding that killed many a trade for me. That risk has to match reward, it does not. What that mindset did for my early trading was thinking that I had to have a really big SL in order to target a large gain.
What you want to find is the stop loss that gives enough room for the trade to breath a bit, but if it goes and hits your stop loss, more often that not it would have continued against you anyways. So, you stopped out before doing serious damage to your account.
Here is one of my favorite things to do: As soon as a trade as gone to, “0,” pips reset the SL to breakeven. If you don’t get any slippage, you have immiedately erased all risk from the trade. (Setting SL to breakeven, can loose you 1-3 pips because of slippage)
So, now (if I don’t get anyslippage) all risk is erased from the trade. If it falls back to my stop loss I’m stopped out at ±0 pips. Nothing gained, nothing lost. (Now, this is only if I’m not to sure of the trade and I think it can go either way)
If I’m fairly confident, I’ll lock in what I initially risked. Which is usually a 20 pip stop loss. So, as soon as the trade is +20 pips, I lock it in by setting the SL to +20 pips. (With most brokers you actually have to wait until it would be +23 or so pips because they don’t let you set it that close to price)
At that point the worst that can happen is that the trade reverses on me and I made +20 pips. A 1:1 risk/reward ratio.
Now if it keeps going my way, this is where the fun starts. I simply keep resetting the SL postive and locking in my pips, where I feel like it, or base it on fibs or support and resistance I have set up. If you are lucky and have caught a strong move in one direction, you can just keep locking in the pips.
This is probably the best thing I ever learned. After you reset SL to breakeven you eliminate the risk in the trade, after resetting to postive you’ve locked in profit however small. It helps elimenate head gnomes that would make you hold on to losers and hope.
Interesting, I have not found a way to get my rrr at least at 1:1. I’d like to know what timeframes do you trade. A 20 pips s/l for me is the least I use and it’s pretty uncommon. Most of my trades have a 30 pips s�l.
Sheetal asked if she can make $50 on a $250 investment daily. I was only answering to that. No you cannot make 50 daily on your initial 250. Yes you can compound it over time to a point where you can-but to her questions,whether she should quit her day job and start trading in hope of making 50 bucks every day from day one, ain’t gonna happen.
I dont know what leverage you use, I think anything more than a 1:4 leverage is risky. With all due respect, this is not to say you are incorrect.
I trade between daily/4hr & 1hr/15 minute. I use the larger time frame for my directional bias and the shorter timeframe to pinpoint my entries and exits.
Ya, it’s not likely you are going to make $50 a day on an initial $250. That is 20%, consistently, without compounding. Can it be done, yes most definately. Is it likely no. At a 20% risk/reward you’d be more likely to clean out your account with noob mistakes and misunderstanding.
Though starting with $250 and compounding your account to the point where you can consistently make $50 a day, is not unreasonable. I started with a $100 account & now $50 a day (on the days I trade) is a little under average. IMO, it’s actually much more reasonable than a lot of people who think they are going to be forex millionaires by pooring their savings into a large account they aren’t skilled enough to trade.
I use my maximum leverage ratio, (400/1 I think) because leverage in an of it’self isn’t risky. leverage doesn’t decide your risk. I DO NOT leverage my whole account.
This is a common misunderstanding when people say they think leverage is risky. It’s only risky if you use the maaximum leverage ratio avialable to you AND place a trade that represents a risk of a large portion of your trading account.
Leverageing your ENTIRE account or a large portion. Ya that’s risky.
Leverage it’self has NO bearing on money managment. You can risk 1% of your account with 1000:1 leverage if you want. Leverage doesn’t increase the risk in and of it’self. Abuse of leverage does.
For instance if my pip value is $1.00 and my trade wins or loses 50 pips. I win or lose $50 dollars regardless of what my ratio leverage is. All, a lower leverage ratio says is that you are required to have more money in your account to cover any given trade.
400:1 = you need $1.00 to cover every $400 you trade. …2:1 = equals you need $1.00 in your account for every $2.00 you trade.
LEVERAGE DOES NOT CONTROL RISK and does not have a bearing on it if you know how to use it correctly.
In fact, as a forex trader, you should want a high leverage available to you. Higher leverage requires less in your account to trade a higher size lot.
When someone says that you are overleveraged, what they mean, if they know what they are talking about, isn’t that they have a high leverage ratio, its that they leveraged most or all of their account, instead of risking a percentage. For instance using full 400:1 leverage on a $100 account and risking the whole $100 account in one trade. That is abusing leverage.
When babypips warns of the dangers of leverage, they don’t mean ratio, they mean leveraging your entire account at one time.
The bigger the lots = the bigger the pips value = the bigger the loss or gains…which is why leverage is dangerous if your lever your entire account. Leverage allows you to trade larger lots than your account would be capable with, with no leverage.
But, you can still only risk 1% of your account if you want. Even with 1000/1 Leverage.
How do you have a 1000/1 leverage on a 1% of account? Help me understand, a 1000:1 leverage on 1% of your account is 10:1 leverage,correct?
Drill it down, dont make the concept harder, people have different definitions for leverage-I understand only one definition, for every 100 dollar in my account I will only trade 400 dollars worth of positions at maximum. And that is 4:1 leverage. Now per your definition for a USD 10,000 account, trading with 1% that is $100, and a leverage of 100:1, I will trade a 10,000 position. For a mini account that is 1:1 leverage. Simple.
I have gone through the same road as you have, I started with a very low amount when I did a few years back. I have used compounding, and very tight MM to arrive at where I am today. I used low leverages, and try more often than not to have at least a 2:1 Reward/Risk. Many will not agree, but I believe that MM is the major component in a traders success.
Well, I don’t know where did you come from with this idea ? You can’t make $50 on $250 account
I made $1,000 in 2 days with only $400 (LEV. 1:100) LAST WEEK and if only $50/day it is easy and sometimes depend on market. My Free signal make at least 20 pips/day and maksimum 125 pips/day
YES !!! YOU COULD MAKE $50/DAY EASY BUT YOU NEED PATIENT, KNOWLEDGE, TIMING AND MARKET CONDITION WHEN TO BUY/SELL. BUT YOU COULD ALSO LOSE $1,000 IN DAY IF YOU DO NOT KNOW WHAT ARE YOU DOING.
But please do not put this in your head that you want to RICH in 1 night in FOREX, it won’t happend.
Man, if you can’t make a airplane it doesn’t mean anyone out there can’t either…:rolleyes:
Of course moneymanagment should be at your trading core.
But, leverage does not dictate the risk. You can risk the same percentage of your account as you can with 1:1 leverage as you can with 400:1 leverage.
I’m not making it harder. If people have different definitions of leverage then they dont’ understand leverage. There is only ONE definition and this isn’t it:
“I understand only one definition, for every 100 dollar in my account I will only trade 400 dollars worth of positions at maximum. And that is 4:1 leverage” That is your own money managment choice if YOU will only trade 400 for every 100 in your account.
It would be the LEVERAGE YOUR BROKER MADE AVIALABLE TO YOU, if your account was set to 4:1. If your broker gave you 4:1 leverage that would mean that for every $1.00 in your account you can, possibly, trade $4.00. It does not mean you have too.
Just because you choose not to use maximum leverage and lever your entire account, does not change your leverage ratio.
If your leverage ratio is 400:1 and you decide to trade at 10 cents a pip and only risk 10 pips, it is still 400:1.
What size you choose to trade based on your account size is NOT leverage.
You are only over leveraging your account if you use the full leverage avialable to you as you trade.
To make it clearer. I have 400:1 leverage on my live account. Wether I trade a $1.00 per pip lot or $5.00 per pip lot it is still 400:1. leverage. I determine the risk, not the leverage ratio.
High leverage isn’t dangerous unless you over lever, that is lever a large part or your whole account with it.
A 1000:1 on 10% of your account is not 10:1. It is still 1000:1. All 1000:1 or 400:1 says is that for every 1000 or 400 dollar you trade you have to have one in your account to cover it. If you risk 10% 100% or 1%, this does not change your leverage ratio.
You are confusing leverage with risking a percentage of your account per trade. They are two very seperate things. You are making a classic mistake.
In fact, as a forex trader, you should want a high leverage available to you. Higher leverage requires less in your account to trade a higher size lot.
This is exactly what cause people to lose thier accounts… Leverage dictates your required margin. So the higher the leverage, the lower the required margin and visa versa… now what does that mean??
When you get margin called, how much money are you going to have left in your account?? haha, well if your at 400:1… your basically busted, at 10:1 you’ll still have something to walk away with… This is why Leverage is called the killer because it can allow you to lose basically your entire account…
READ the fine print on your brokers margin call procedure
I should say, this really applies only to people who do not follow good MM…
But in answer to the orignal question, yes you can make $50 a day
After reading through all the replies, just want to add in my thought. Since enough has been said about money management, I like to touch on the technique part. If you decide to over leverage your account or risk more than 1% of your account, pls first find a good trade trigger first that constantly bring in the pips for you (only way to find a good trade trigger is to go through demo trading and find out what works for you). You must be confident of your trade trigger and ensure that this trade trigger can give you a good risk reward ratio, so that you can achieve your daily $50 with an initial capital of $250. In addition, if you are starting with a small account and risking more than the 1% or 2% rule, pls use stop losses as a small $250 can be wiped out easily. In addition, trading a small account and risking more than what you can risk can be frustrating as any single bad trade will send your mind into wild thoughts so your psychology part must be well taken care of. Just my own harmless thought.
For a senior member you don’t know what your are talking about.
You do not manage risk with your leverage ratio!!! Leverage ratio has no bearing on the percentage of your account you are risking unless you are using it too it’s full extent. You decide your risk NOT your leverage ratio. Risk is not managed by leverage ratio.
If I have $100 in an account and only want to risk 1%, I can do that regardless if my account is at 400:1 or 1000:1 leverage.
Leverage is only dangerous when it is used to it’s full extent.
Risk managment per trade % of account and leverage are NOT THE SAME THING.
What does this mean?
"This is exactly what cause people to lose thier accounts… Leverage dictates your required margin. So the higher the leverage, the lower the required margin and visa versa… now what does that mean?? "
Yes, leverage dictates your required margin. I have 400:1. All that means is that for every 400 dollars I trade in any 1 trade I have to have to have $1 dollar in my account to cover the margin requirements.
It does not mean I have to lever my whole account at once or even trade $400 dollar lot sizes at one time.
I have 400:1 leverage on my micro account. I can trade at .01 cent a pip if I want. If I loose 400 pips at .01 cent a pip, I’ve still only lost $4.00. The
400:1 leverage doesn’t multiply that loss.
Leverage only ruins accounts when you lever too much of your account at once.
Again risk management IS NOT DONE with leverage!!!
If anything you want as much leverage as any broker will give you,because it requires less money in your account to cover any position.
P.S. YOU SHOULD READ the babypips section on leverage and margin because you obviously don’t understand it.
For a senior member you don’t know what your are talking about.
Ah perhaps you should re-read what i wrote… I never mentioned anything about “risk”… The two are very different.
My point was… If you do not use money manangement, no stop loss… etc etc, and were at the point of being MC
a 400:1 leverage account would be virtually completely wiped out
a 10:1 leverage account, you would still have something left in it
MC (depending on your broker) is done at a %(50%, 25%) of your required margin. So the lower the leverage, would mean in the event of a MC, you would have more left in your account.
Now if you don’t understand that, you should go back to babypips…
Leverage is only dangerous when it is used to it’s full extent.
Ah what? hmm, my account leverage doesnt change, perhaps you can explain to me how I can get the full extent of my leverage? So my account at 100:1 isnt really that? 99.8:1 mabey???.. lol
Leverage only ruins accounts when you lever too much of your account at once.
Again risk management IS NOT DONE with leverage!!!
lever?? now is that the same as risk?? are you trying to combine true leverage with account leverage and mixing them up inbetween? Cause the way you use the word leverage makes no sense half the time…
Now from your math, i can see you understand leverage, just [B][U]terrible[/U][/B] at explaining it.
If anything you want as much leverage as any broker will give you,because it requires less money in your account to cover any position.
Maybe you want to try that again…
In simple terms, the higher the leverage, the less required margin for the same sized position. This leaves more “usable” margin to cover your position… and w/o proper MM, the more “usable” margin to lose…
As a “master contributor” you should be advocating caution to new traders… and trading a 400:1 account as a new trader, who will undoubtably make mistakes and forget SLs…etc…etc, [B][U]is in very poor judgement [/U][/B]
“However, even a fraction of that is a strong argument for starting a micro account and slowly building the account upon it’self, instead of saving up a large sum of money from a job AND THEN learning to trade.”
I think the idea is you save up the money WHILE learning to trade, so when you are ready to get serious, you have enough capital that you DON’T need to risk 10% per trade or whatever to make any money worth counting.
I’m sorry, I don’t care if I get banned for saying this. I won’t explain leverage again because I already have. But YOU ARE ARE A COMPLETE MORON. You do not understand what you think you do.
What percentage you risk of your account is decided by you, not your leverage ratio!!!
You can risk 1% of your account wether your account has leverage set at 2:1 or 40000:1.
If you decide to risk 1% of your account per trade or 50%, if your leverage is set at 400:1, it is still 400:1, regardless of your risk %.
If I trade at $1.00 a pip and my sl/risk% is 20 pips for one trade…regardless of my leverage ratio setting on my account I am still only risking $20 of my account.
(edit: forgot to add, it’s a daily percentage figure that does account for intra day w/l, human error etc., because at the end of the day you still leave with a 20% bump)
BUT YOU COULD ALSO LOSE $1,000 IN DAY IF YOU DO NOT KNOW WHAT ARE YOU DOING.