Setting your demo account to an amount close to what you plan to trade live is a smart move.
Perhaps trouble with capital preservation is a symptom that needs to be addressed by proper risk management. Maybe review your margin/account size ratio as well as lot size per trade, consider entries at market vs. pending and are the trades with the overall trend or against?
I know that these are really basic items but they can be easy to forget, overlook and not consider in the “heat of the moment”.
I know how to compute the 2% trade size. But what happens is I have more losing trades than winning trades. I keep changing my trading plan based on what works and what does not. Hopefully, I can come up with my own successful trading system soon.
Have you backtested your strategy? If so, what is the average risk/reward ratio? If it’s 1:1 you need better than a 50/50 win/lose ratio to prosper. If it’s 1:2 you can survive and prosper on a 35/65 win/lose ratio. If it’s 1:3 or higher…skies the limit!
Isn’t that more attainable on a 4Hour to Daily Charts? The reason I ask is because smaller time frames have less daily ranges and a 1:3 would need to have positions open for more than a day or two in order to hit the target for a 3x reward of ur risk!
Your concern seems more related to the minimum pips a broker allows for a stop loss, which limits the ability to place the “super” tight stops needed for a 1:3 risk-reward in short timeframes. If you’re looking for a 10 pip gain, a 1:3 RR requires a 3-4 pip stop. What happens if your broker requires a minimum 10 pip stop? If you raise the profit target to 30 pips to balance the RR you might never get to this target. I understand where you are coming from.
This is why, in my humble opinion, trading the short timeframes is a mug’s game. At present, you are losing more trades than you win, but that is not the real issue. A trader can survive on 1 winning trade in 100 if the winning trade is more than the combined losses!
I don’t know your personal motivation for trading short timeframes. Perhaps you crave the action or feel longer timeframes are riskier. If you add up the value of your losing trades within a losing streak, however, I am almost certain this amount would be more than, perhaps, a 50 pip stop loss applied to a daily chart where the potential might be far greater than a 1:3 risk-reward ratio. Last year, for instance, I closed a trade in the USDCNH for a 1:52 risk-reward. The initial stop loss was 47 pips, the trade lasted 9 months and presented several opportunities to move my stop to lock-in equity gains along the way and apply some of that equity to add to the position.
Backtest your strategy over several timeframes, including daily and even weekly charts. You may be surprised to learn that there is nothing wrong with your strategy, but rather the timeframes you are trading.
backtesting proves nothing, youc annmot dip your foot into the river the same 2 times. Backtesting is only really useful for testing processes, dont think for a minute because something was profitable in backtesting that it will be profitable in the future:live.
r to r and all that other stop loss logic is flawed, it works great on paper and in your mind, but hardly applies in live markets. the battlefield is in the mind in forex 89%+ , most traders beat themselves with loss stops. Stop losses DO NOT LIMIT RISK! stop losses do not limit risk, thats flawed logic and a trick to convince you that a stop loss is "best practice: and actually it is NOT! at least not if it is your intention to make a profit.
as to the $500 question…I prefer to start with $1000, and I can show you recent new $1000 live accounts, sucessful trading is measured by the percentage gains per day/week or month.
Realisctially if you risk 100% you could make 100% but thats not really best practice. the less you risk the less you will make, so you need to balance the risk on (trades open) with some conservative leverage, so that you make steady sure gains over time.
so no matter the size of the account, your trading is only measured by % gains. if you shoot for 10% gains per month thats veryu conservatived, I think, and really bulletproof if you can make 10% gains per month 12 months a year, thats 120%.
but what is key, is that even if trading only at $500 live, if you trade for a year and make 100% gain that only puts you to $1000 balance, but you have to figure that is a huge success!
The real profit in trading a small account id learning to trade in most any situation, making a few bucks is good but just staying consistently profitable is the real benefit.
Then when you increase the account size over and over again you will bring those skills along with you to be enhanced with sizing and leverage as applicable.
Im doing a small account challenge for the fun of it i dont really recommend doing this but im just testing my skill ( p.s. you most likely wont get the results im achieving ) but the goal is to make 1% per day yes its only $20, and the minimum and its all intraday , im on day 3 right now, first day was 1 trade at 60k lot size took about 3 hours to reach $150, day 2 i traded with a 20k lot size and took 4 hrs to reach $130, today i haven’t taken a trade yet but will start trading with in the next hour or so. Like i said before not everyone will be able to do this my risk is moderate and its the same strategies used for my maine account ( i trade for a living )
Tbh I can make 500 dollars from a 100 dollar deposit in around 4 hours H1 time frame… At the same time I can lose that same 100 dollars in less than 2 minutes on a bad trade (or a good trade killed by a volatile candle). Don’t listen to anyone just find your own way tbh.
You can always start with a Cent Account. I have been testing an EA since December last year. Set deposit at $1000.00 for cent account. Gives you 100000.00 Cents. That way you have lots of margin to work with. Leverage is 1:500.
Using 3 fundamental ideas of money management, I conclude that you can realistically expect to make 2% per week. The figure will change however dependant on how well you stick to your trading plan and how your plan differs from the following 3 basic practises / ideas:
1 - Risk a maximum of 1% a/c balance per trade
2 - Trade a 3:1 Reward - Risk ratio. This incorporates your maximum 1% loss and sees you entering trades that offer a potential 3% ‘win’.
3 - The ‘3 / 10 rule’ - this states that out of 10 trades, you can expect to LOSE 7 of them! Yes, the odds are stacked against you. Good traders know this and use ‘curtailing’ in their trading plans in order to end with a profit.
Therefore…
From 10 trades, 7 lose 1% each (7%) and 3 win 3% each (9%) = 2% earned at the end.
This is obviously very subjective and a good trader can improve on these figures. The 2% figure can be expected as a new starter in the field, if they respect the 3 rules mentioned. These rules are based on general probability rather than expertise.
If you can consistently make 20% returns per year, which is ridiculously good and incredibly hard to accomplish, that means that even a 100K account is not enough. It has to be much more than that.
Think about it for a bit… 20% returns of a 100K account per year is 20K before taxes… That is not enough for making a living, you will just be breaking even at best. You need patience, discipline, and proper risk/money management. But even if all those are rock solid on your part, you will still need to have at least 300K in your account balance to make a comfortable living. You need money to make money.
Next best thing, is to work as a prop trader for a firm, or trade other peoples money and get a yearly cut from the profits.
500 as a trading account is only good for live practice, not for making a living
This is the harsh REALITY of things…
Well, I don’t see the purpose of such a question as is you are starting just from the $500 probably you are here not for the money, maybe for experience or just to make an experiment. You name it. I’m not saying that this is wrong thing; you just don’t need to set those high expectations at this time.
When someone says 2% risk, they’re usually referring to percent of their account. If you have $1000 in your trading account, you would risk $20 on a trade. You’d have to do the math on any given trade to set your position size for the given stop limit to make that the risk of your account.
10% per month is good and certainly attainable. It’s what I do. With 50% win rate and from 1:1 to 5:1 RR. Why is it so hard to believe people can make the gains. Perhaps because most people use well known well tested popular trading systems used by the retail herd that trades against the institutional banks rather than with them? Hmm
The reason I ask is because smaller time frames have less daily ranges and a 1:3 would need to have positions open for more than a day or two in order to hit the target for a 3x reward of ur risk! 