I’ve been messing around with an OANDA FXGame account for a little while and have been doing pretty well on it so I’m considering moving to the real thing in the next few months. I just had a few questions I was hoping you could help me with.
Regarding margin accounts, are forex brokers very strict on who they are willing to give them out to? I only ask because I recently graduated from college and don't have much credit yet. My understanding was that they place a margin call on your account before you go negative so your losses pose no risk to them. If this is the case, credit score, net worth and annual income, the things brokers look at before you open a margin account to trade stocks and such, shouldn't matter correct?
Regarding the OANDA FXGame account, does this perfectly simulate the actual trading experience as far as live quotes, execution speed, accuracy of orders and such. I realize there are many differences between using virtual money and real money with regards to emotion and discipline so for the purposes of my question, assume the FXGame account vs. Real account are the only potentially changing variables.
Is OANDA a good place to start? I've researched brokers and the two that appeal the most to me are Interactive Brokers and OANDA. I plan on opening the account with 5k just to get my feet wet and I believe IB requires 10k minimum deposit so I think that might be out of the question. Any other suggestions for reputable brokers? I've heard some horror stories about forex brokers, but then again this is the internet. Not sure if these are true or if people are simply looking for somebody to blame for their ignorance.
As someone who has horrible credit, I can tell you it is easy to open an account with OANDA. While your understanding of margin calls is correct, the possibility that the current electronic trading environment would allow for you to have losses in excess of your margin requirement are very slim. I think the application information is mostly a hang over from the 90’s and earlier.
This is even less likely with OANDA because they (unless things have changed) use a dealing desk and you don’t actually get straight through processing. This usually means a smaller spread during most market hours (although you may see 10-15 pip spreads during low liquidity or high processing times).
Oanda is a great place to start, and the game account is virtually indistinguishable from the live account.
Don’t start trading with normal amounts of live money until you are comfortable with losing money (not too comfortable). In other words, instead of using lot increments with your 5k, try using .1 lots or .01 lots to start.
Thanks for the response. I’ve been trading stocks since I was a kid so I’ve lost my share of battles. My strategy avoids trading around news releases so if they increase the spread around these times it shouldn’t be a problem. I’ve been using 10k lots in the game account, only keeping 1 open at any time. At 50:1 margin its roughly 5% of my account value for EUR/USD (probably is a little high). Just trying to compound lots of small profits into something decent and live to fight another day if things go south. I probably will use 1k lots when I start until I’m comfortably trading forex with real money. Glad I found this place as there seems to be lots of knowledgeable people and good information.
I just opened my first real money account with Oanda.
No credit check, really easy to fill out paper work, scan your driver’s liscence, W-9 and copy of credit card statement, (or some other proof of address) and you’re done.
Then fund your account, you can use paypal, (small fee involved) or send a check for free.
Is real trading the same as demo trading on Oanda? YES! Exactly the same, same order execution pace, same spreads, same everything. I absolutely love it!
How much to start with? Well my advice is this:
If you think you have a good system then START RIGHT AWAY WITH A TINY ACCOUNT! Instead of demo trading for 2-3 months and then jumping in with $5K right away, why not start with $50, (1% of what you plan on trading) and see how you handle the psychological pressures of real money trading?
With Oanda you can trade any size lots you want, so you can use your money management rules to their fullest. As an example, I have 14 trades open right now in my $10 Oanda account, smallest size 6 units, largest 16 units. I am risking $.20/trade for each and I know that any profits (or losses) will scale exactly if I add more to the account in upcoming months, ( I plan to go up to $20,000 over 7 months).
If you make money your first month, bring your account up to 10%, then the full $5K if you’re second trading month is also profitable. Or you can space out the money over longer time frames, say 3-6 months, if that’s what you’re comfortable with.
In this way you’ll be a more confident trader when you’re dealing with the big $, because you’ve been doing it for real for several months already.
Remember that most people blow their entire accounts initially, (hopefully with the wisdom you get at babypips this won’t be you, or me for that matter:D) so why not make any such initial account small? Wait until you’re a more seasoned trader with a consistantly profitable system before you start trading big money.
Thanks for the information ArmyDoc. I’m pretty sure its oanda I’m going with now. I remember reading somewhere that most people lose all their money in the first week or something ridiculous like that. I’m assuming these people don’t understand leverage. They open an account with say 5,000, and then with 50:1 leverage as with oanda, open $250,000 worth of lots, then they simply lose 2% of their account value, margin call and goodbye account. I’m not saying I’m sure I won’t lose all my money, but I would hope it would take me longer than 1 week to accomplish this.
Really? They lose everything in the first week? Well if so that makes me feel very special, seeing as I just completed my first real money week and I’m up 9%.
Of course, I have spent a total of 500+ hours in total, researching FOREX and devising a system with the help of all the great minds on Babypips and about a month succesfully demo trading various derivatives of my current system.
Though its too early to tell whether or not my system will work in the long term, any success I have is due entirely with the first rate education I received here and the important lessons I learned involving money management and trade management.
