Yea! I’m here because I am a newbie little pip-squeak, He-He! I have a few concerns. The term Extremely Risky, of which I keep hearing a lot about. And if so risky just what is a newbie up against in Forex. Also; What is a little Pip-squeak to think of these online broker firms wanting you to trade Forex on there sites once they learn you got a little dough to open a mini account. Actually I have been wanting to do this and I almost started to open an account, but I can’t afford to keep shilling out dough if my account goes sour. So my tidy little amount is either gonna tell me; Hey! Your really lucky and have beat the “Extremely Risky” term or your not the pip-squeak you thought you were. Does any pip-er or can any pip-er tell me of a good online Forex firm I can go with that I can trust. [I]What is a pip-squeak to think anyhow![/I]
Having a hard time understanding you with all the puns and witty jokes… Lol =_=;
All puns aside! I saw a few jokes and puns on this site so I thought I might ad a few myself. Actually like I said I am here because the thread says Newbie! So, that is what I am a Newbie! That is why I am here! I am trying to make a little since out of all the hype about Forex. What is a New trader up against if, the term “Extremely Risky” keeps popping up. Sounds to me like a losing proposition whether the new trader has learned the ropes or not. I mean are there any probable outcomes to the new trader if he or she strengthens there learning curve. Or is Forex just a game where the most money wins. If this is so, then broker firms should tell the new trader Hey! Sorry, but your tidy little amount of doe you just shilled out is going down the tubes, and we win you lose!
Well, you’ve asked a question about something that most people just overlook.
Mostly they can’t see because of the dollar signs covering their eyes.
Let’s take a good look at one of those “high risk warning” disclaimers.
From CitiFX:
Trading foreign exchange involves a high degree of risk. CitiFX Pro offers trading on margin. The leverage created by trading on margin can work against you as well as for you, and losses can exceed your entire investment. Before opening an account and trading, you should ensure that you understand the risks and can withstand the losses and that you seek advice from your advisors as appropriate.In the United States, CitiFX Pro is a service offered by Citibank N.A., New York, 390 Greenwich Street, New York, NY 10013. Citibank N.A. is an entity organized under the laws of the United States of America.Please review the Full Risk Disclosure and Privacy Disclosure carefully before opening an account.
Now that you’ve read that, let’s pull out a statement that is the KEY to risk.
CitiFX Pro offers trading on margin. The leverage created by trading on margin can work against you as well as for you, and losses can exceed your entire investment.
Note the statement in bold.
Then, get a good solid idea of the explanation of “trading on margin”.
Margin Trading: What Is Buying On Margin?
Now, re-examine your trading lot sizes and react accordingly;)
The online Broker, I believe it is FXCM or something like that, says they have a no risk balance guarantee. They say that you can’t go over your account balance. So, I am a little iffy on this matter. I don’t know much about Forex, and i am sure with some practice I will get good at it, but I am not in the large money area. Actually my starting account is 2000.00 Small. And I really don’t have much more to contribute. My plan was to learn Forex as best as I could, make some money, expand my account etc… You know the big dream, but I was also hoping with some education it would put me ahead of the game, but now after reading and research I am wondering if I have enough to sustain me through any loses. Maybe not!
Risk is about the only thing you can control.
And you can start with $2000, sure. I would limit risk to 1% of the account, you would need a terrible strategy (or no strategy) to run out of money before you got the hang of it.
That sounds encouraging. So you think it’s doable. I know I may be asking to much, but what do you think of FXCM Forex. I think that’s the name. I have checked some complaint forums about them and it seems there 50/50 good to bad. But you can’t always go by what you read in forums. Since they have this No debit guarantee I may stick with them. Seems they have good support. Might be good for trying some skills, after I learn of course and get some practice. Any thoughts appreciated. [I]I just got done talking to FXCM and they said they have some numbers for % of clients who lose money with them. The 10,000.00 and more accounts do the best, but at 2000.00 they have a 33% profitability. So 100% - 33% = 67% Not good! More than 50% lose money. Of course there reasoning is they go above there margin or take to high a risk with the amount of money in there account. So, I’m still debating.[/I]
I trade with IBFX, but their spreads are just ok. Oanda I hear has the best spreads and alot of people really like them.
As far as your accounts size, dude, You don’t have to start with that much, in fact, if you are gonna do a live account. Start with a $100 bucks and trade nano lots. You can trade 5 nano lots ($.05 a pip) $16 of margin for a while and build yourself up to trading 1 Mini lot… ($1.00 a pip) basically $320 of margin.
Right now I am trading up to 4 micro lots, ($.40 a pip) or about $128 of margin and my account size is a little over $350. I only trade that big when I am very sure of the outcome. Most of the time, ill trade between 1-2 micro lots and I have yet to sustain a loss that sent me home crying.
The main thing that will keep you in the game for a long time is a Money management plan.
Anyway, Cheers and good luck,
fi
That “no debit guarantee” you speak of is pretty common in the US brokers anyway, I would guess that most all brokers have that. It just means that you can lose 100% of your deposit but not more than that. Aside from the fact that you shouldn’t trade unless you have a working strategy… this is actually a good protection because if something awful were to happen (say nuclear war breaking out) then regardless of strategy your account could vaporize in seconds. That guarantee protects you from bankruptcy I think LOL.
FXCM is a reputable broker as well as Oanda. There is a thread here somewhere on BP about how to choose a broker.
If you haven’t traded before, you shouldn’t start with $2000 cash, that’s too much in my opinion. Go through BP school and start with a demo account, then move to a SMALL live account (maybe only $50). Work with percentages only and then scale up the $$ when you are truly ready.
You know I hadn’t thought of a smaller account. See! I’m learning already. Might be good to start smaller, test the waters and see how I do. I thought with a little more in my account I would have a better chance of profiting. Micro lots! I’ll see what FXCM has as far as a Micro account.[U]A little pippy bird said to me…[/U] [I]I think tis better to look in pond before jumping in.[/I] I’ll read more about choosing a broker. I think I’ve already went through that class. Thanks for advice.
Hey Pingback, this is actually wrong logic for forex. It does apply on some level to commission-based brokers (like equities) but in forex most brokers charge only spread (in equities it’s a double-whammy spread + commission).
Because you’re only paying a forex broker spread, it means that the size of your fee is directly proportional to the size of your trade. Therefore, your degree of profit is not tied to the size of your position. This is GREAT because it allows you to master a strategy using pennies and then scale up to $$ when you are ready. In that case, your winning strategy can be identical to the one you trained with. The biggest “gotcha” you’ll run into is your own psychology, but that is something you can learn to take control of.
Focus primarily on percentages and not dollars or pips. Set your goals and risk on percentages.
Looks like I’m getting somewhere. I don’t know what you mean by percentages. Is there some information about this on the forum. Are you referring to a micro account. Or mini lots. And does this include percentages. Any reccomendations on how much I should start with in my mini account. !00, 200, 300, 500 bucks. Thanks!
I just re-read my own post and I don’t understand what I meant LOL by “Therefore, your degree of profit is not tied to the size of your position.” I will have to disagree with myself… I will try to reword it here:
When trading with a non-commission broker, your fee is paid in the BID/ASK spread only. The spread value will be proportional to the size of the position you take. In other words, if you trade a in microlots, you will pay only a tiny fee. If you trade in standard lots, you will pay a larger fee. The important point here is that you are not paying a penalty fee (ie commission) with each trade.
By percentages I mean… try to build your strategy in such a way that you are focusing on percentages instead of pips wherever possible. Some examples might be:
- I will take trades that have a 2:1 or better reward/risk ratio only (this is same as saying: I want to yield 100% more than I am risking on each trade)
- I will strive to reach a goal of 1% yield per day
- I will limit my risk on any individual trade to 2% max loss
- If my trading reaches a 5% loss, I will stop trading for the day
Notice my statements do not mention hard pip numbers or dollars. It’s because in most cases, they shouldn’t be relevant IMO. Those figures are only needed to calculate your lots-per-trade, so you would plug them in at the last second (after your strategy analysis). In this way you can easily scale-up your account and it is separate from the actual trading strategy.
I am an advocate of using a live money account to practice with as soon as possible (vs. virtual/demo money). You can start with as little as $10, it doesn’t really matter. The broker I use (Oanda) carries profit/loss calculations to 4 decimal places. So even a tiny $10 account is useful to determine if you are winning or losing on balance.
I think I know what your saying. I’m not that far into understanding a lot of it yet. I’ll need a bit more study under my belt. I guess a live account with lower/mini lot trades and just doing it might be a better way to trade, maybe learn better that way, by doing. Many times that is the best way. I’ll decide on that at a later date after I learn some more in the Babypip school. Not sure who to go with. FXCM seems O.K., but I think there just interested in the money as all of them are. There gonna make there money no matter what. How has Onanda been for you. Not sure how to spell it. I’ll check them out.
Your selection of broker can make a difference because some use different platforms. For example, at least 3 different platforms exist for the brokers you mentioned (Trading Station, Metatrader, fxTrade). In my experience the platform can make a huge difference. Some are true “visual trading” where you can place orders directly on the chart, whereas others require you to fill out an order slip.
So you might want to demo trade each platform to figure out which one feels best before you decide on the broker.
I haven’t had a chance to check all the online brokers out. Since I am going with the mini lot account, FXCM doesn’t offer phone support. And probably a few more features. I suppose other brokers are the same. So, with a mini account your probably not going to get all the stuff that comes with a larger account.