I enjoyed trading this afternoon, and also read about fibonacci on Pipsology while still in transit. I made 368 pips at a position size of 0.01, which was $3.68. After the broker firm subtracted its fees, I remained with a $3.41 take profit.
My two QUESTIONS are:
(1) How can a trader, who makes large numbers of pips, profit from such lucrutive trades without putting one’s account at risk?
(2) What do you think about the position size of 0.01. Is this really reasonable?
It’s about position sizing and risk management, is what I’ve been learning. What were you risking on that trade? Keep it to anywhere between 1-5% of your account, and that should keep you from blowing your account. How are you approaching risk? And have you traded your account with leverage? Leverage could definitely help
Hi! Thanks for sharing. I indirectly mentioned above that I use 0.01 position size. This is the same as 1%. I also use a 50:1 leverage. I think that you noticed that 1% is absolutely nothing especially for people, who make lots of green bucks elsewhere. Again, more than 2% is considered risky. That’s why people must just be honest enough to say that are all risking a lot by using more than 0.01. I don’t think that there are any veteran traders, who are using 0.01. I would like to think that only the newbies use 0.01 position size.
The amount that you profit from the trade depends on the number of pips times the monetary value of a pip. And the value of a pip depends on the size of the position taken. It is just maths. But, of course, the pip value is the same whether the price goes in the right or the wrong direction.
So the only way that you can avoid destroying the capital in your account is to position you stoploss such that the number of pips x value per pip = x% of your account balance (whatever you decide “X” should be). The only way that comes to mind where you can have an open opportunity on the upside compared with a limited risk on the downside is to buy options instead of outright spot/cfds. ( I am not talking about binary options!).
It is an excellent trade size when learning and test-driving a strategy where you want to experience it in live conditions rather than just demo. It cannot do serious damage to an account unless that account is really small. The core emphasis when learning to trade is to achieve consistency, experience and confidence.It is not so important how much money you make. That comes later when all you need do is ratchet up the position size and expand into multiple trades, scaling in/out and other such more advanced techniques.
Thanks for your feedback. It’s helpful to hear the same things over and over again. I think I have just out grown the demos. It’s high time I traded a live account. My predictions are often right and I have traded on a winning value consistently. So, next week I will go to a live account and see its impact on a small trial account. Watch me grow!
. . . 0.01 position size is simply 10 cents per pip. It’s too low. I think that it’s great for a fresher trader, but not an intermediary beginner. I think that $10 per pip is ok depending on the account size, and where one places the stop loss. I tried it several times. It worked well for me. I don’t know whether it’s suicidal on a live account. I will only after trying it. I’m ready to start small $1 per pip. Then grow to $10 per pip. My start up margin will be $1000 on a 50:1 leverage. Let me know if I’m over ambitious here.