Ever heard of compounding?
“So long and thanks for all the fish”
-Hitchhikers guide to the galaxy-
It sort of presupposes you win every time.,
Try this. Go into a casino and put a buck on red, if it loses put 2 bucks on red, if it loses put 4 bucks on red, if it loses put 8 bucks on red. Then 16 for a win of 1 buck. Start with 1000 and you win 1000.
Compounding is what we probably all do anyway. I can easily afford to lose more than 120 bucks a day, I,ve made far more than that but I have spent some of the money too.
That’s not how you compound in trading.
When people say risk 1-3 percent of your account, they mean change the 1-3 perecent to reflect losses as well as wins.
So, for every loss the percentage goes down to the new account level.
What you described isn’t compounding, it called doubling down.
Compounding doesn’t suppose you win every trade, becaue if you do it right you de compound with every loss, thereby not making your risk significantly larger with the next trade.
If you win, great, you can compound up.
That’s called a Martingale strategy and is one of the dummer things people use. House/broker always beats you in the end if that’s how you play.
All it takes is one losing streak and you’re gone.
Well I started out my live account trading with $100 and I lost it over the course of a few months. I demo traded for 3 months and deposited another $100 and I"m up to $1312 since July. I know it’s December but I"m slowly building my account. I would say when you’re ready to start live, start it with an amount you’re comfortable with losing.
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Yes, but it does assume wins. More than loses.
If you have more wins then you will always compound up.
If you have more loses you will eventually fold.
Compounding is about how numbers work. Up or down.
Compounding or de compounding doesn’t assume wins or losses.
The only entity assuming anything would be the trader getting all starry eyed when he only sees what compounding up can do, while ignoring that de compounding can help him cut his risk with every loss, so he can at least have quite a few more trades and maybe learn something.
Anyone with a kindergarten education will tell you regardless of compounding that if you keep losing eventually you fold.
The point is if you de compound you at least lose less with each successive trade.
stage 1
Micro - learning stage - stay here until you are confortable and know what you are doing
stage 2
Mini - when you are ready to invest more and want a better return
stage 3
Standard - you will either reach here by compounding, or you will want a better return.
If your using oanda your even better off as you can set your own unit size. Within the above criteria.
N
Here’s how I went about things:
1st started on a demo account to learn the platform and find a strategy i was confident I knew inside out to trade.
2nd, moved to a live account to get the feelings and emotions under control. Saved up $200 that was my risk capital, I saved it over time so if I lost it, I wouldn’t be in financial hardship. $200 was enough to feel the emotion of winning 1% on my account on a trade (only $2 but hey, percentages and compounding go a long way), or even losing a $1 trade.
I’ve been with IBFX trading for about 2 weeks now. Profitable only by the deposit bonus. 
I can say my losses are due to emotion, once that is under control and am profitable, I will deposit more money and look for growth on investment.
I will second IBFX btw. I started with FXCM but I really enjoy IBFX as I can use MT4 and you can trade nano lots if you’d like ($.01 a pip)
If you alway risk the same percentage of your account then you auto compound. And any child with a kindergarten education with tell you that profiting assumes wins. wins are all that matter. Compounding is not a technique or a strategy, it’s just how numbers work.
Compounding and de compounding is moneymanagment 101, as far as trading goes.
Novice traders think wins are all that matter, that’s why they lose their money.
Anyone that’s been trading for a while and can make money at it will tell you thinking about your potential risk and learning to cut losses short is paramount.
[B] Profiting, does not just assume winning. In order to profit your losses and risk have to be managed well, so they do not eat up your trades that do win.[/B]
Just winning is not enough, you have to have strong risk and money management skills.
Agreed, but by winning I also mean profiting, which is all down to risk reward etc. You always know your risk but never really know what your reward will be. So keep your RR in your favour and your win loss in your favour and do it consistently you’ll be ok. I didn’t do anything until I could do that.
Hi mrnice,
When i started learning forex. This is also one of my thought as to how much
to deposit and start. But as i learn and read more posts and forum relating to forex. I think it is not relevant to how much should i start.
I think how much should i risk per trade. That is when i read some money managment to educate. its all in proportion to your capital.
Lets say you adopt the traditionally 2% risk per trade out of your capital. (This is one of the money management. There are also alot. You need to found out what strategy works best with your money management.)
So you roughly know if you deposit $50 and $100 or $1000. What you expect to gain. For example, if you stick with the traditionally risk method. Your $50 at the end of the year produce a profit of $35. However, your $1000 produce a profit of $250.
Share with me your method on the $35 profit. Just read through more posts. Keep on educating and learn. See other people way of trading. Good or bad. You need to try and filter out yourself
regards
vincent
I think that 1300 eur is ok, is the mini account my broker ac-markets has. Enough to get good profit and to be cover from bad traders… for a start account I wouldn’t advise more than 3000 demo, trade on the demo with the actual money you would invest and more than that for a first account might be to much for your nerves to handle…
A newbie can start with $1000 live account that seems to me reasonable
Rhody said it back in 2009.
A newbie should be, first of all, Demo’in with real money.
Throw down $50 on Oanda Mini,
This is a game of PIPS, which translates into + or - depending on your strat,
Learn to count pips first, then the money will follow,
Start with a dollar is you want, the matter of fact is, you can only Leverage what you have available, and that % will never change, reguardless if its $10 or $1000
And, I want o actually add this, Test strat with Demo, when your comfortable, then go to real money, but there is no need to gamble away $1000’s when you dont know whats going on to begin with…
Just keep in mind, THis is a game of PIPS, The $$$ part is a smoke screen to trick the mind.
There is a differance in losing pips when the pair jumps out of the blue, and losing pips due to not haveing the proper knowledge of whats going on.
Learn to win, EVERYTIME, and the $ will follow suit,
- Like I should even be writing in this thread, LOL…
Of course before a newbie starts with a real account he must have repeatedly practiced with a demo account to see how he would fair in a real account but I will never encourage anyone to jump into the market with an amount less than $1000
micro account micro account start first with a demo account play around with it a little then when you get how everything works and you feel good about starting a real account make a $150 account and start trading cents…look even if you do lose the $150 your not gonna go kill yourself no biggie just get back on that horse and start working again
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