Hey
Thanks again for the help. I understand that not everybody gets massive pips per day
And therefore with the brokers spread, if your only targeting 2 - 5 pips per trade/day, how are
You getting on with the higher leverage risk to maximise your profit?
Forex wales
Please correct me if I am misunderstanding your question. Your asking how do we manage with higher leveraged accounts and the risk associated with that?
I would link to the school grade 13 for money management. Here’s my veiw on it:
As far as using higher leverage like 50:1 and 100:1, risk, in my humble opinion, is not really added the account. This only changes your margin requirements. A good trader will have more than enough to cover his open positions and not ever risk a margin call.
What it really comes down to is what percentage of your account your risking with each trade. You should always use firm stop losses and only risk 1-2%. Take me for example. I started with a $5000 account. The most I can risk on one trade, 1% of 5000, is $50. I usually use 50 pip stop losses. THis means that I can only trade in lot sizes where each pip is worth $1. This is usually around 10,000 units or 1 mini lot.
Concerning leverage: If I only have 1 open trade at a time then I could trade in 10:1 leveraged account which means each trade would tie up $1000 of my account. This keeps me from trading several positions though. If I bump my leverage up to 100:1 I could open up a dozen trades as they are only $100 a piece. I would never do this but It give you a cushin against margin calls.
If you are only trading for 2-5 pips the lot size that you can trade in is not determined by your leverage, because most brokers let you change back and forth. It is determined by how many pips you risk each trade. If you are using a system with 2-5 pip profit target and 10 pip stops then you can figure out the risk you can afford. If you are shooting for 75-200 pip stop losses or not using one at all I would caution you to recosider trading at all. I’ve heard of some systems that sell you on their high rates of sucess but the one time your trade goes bad it kills all your profits.
Anyway, check out baby pip’s school if you haven’t already.