Apologies if the questions sounds silly but I am new to this.
If I intend to open a $2000 account, what should be the preferable size of a trade lot and which duration of chart should I study?
Please also share the above for a $3000 account.
He umairkhd, there are plenty of threads here with lotsize calculation example. Perhaps it is easier for you when you look for those, they have some detailed examples in them so that you understand how it is done.
You are best to master the Daily chart first, thinking long term, trade with the trend, match a strong currency to a weak, Trade small lots with wide stops, don’t chase a move wait for a pull back, for small accounts the general rule is risk no more then 10% on any one trade, your odds of success will be greater if you trade a larger account risking less then 5% per trade
Good luck
Hi.
Before you dive in and open a live account, can I suggest you spend a couple of months studying at the free school on here?
If you continue reading forum posts while studying, by the time you complete the school you will have a much better idea what type of trader you are, what timeframes you will trade in, which pairs you will trade, how much risk you can handle (this will help determine your lot sizes), and will give you a better chance of not blowing your hard earned money when you start out.
Regards
Well there is no certain answer for that. You can choose high risk “fast earn strategy”, mostly its scalping when you open 1 lot order and hunt for a couple of pips to make 20-30$ profit.
Or focus long term - open small 0.1 position wait for 1-2 days or even more and grab 200-300$ profit at once.
Choose what is yours.
I prefer to use second one with Hotforex cuz the higher is timeframe the less is noise and the more accurate is your forecasts.
You have asked two unrelated questions. Let’s take them one at a time.
• If you have a $2,000 account, what position sizes should you be trading?
For any given account size, position sizes should be determined by (1) risk percentage, and (2) stop-loss.
Risk percentage means the percentage of your account balance which is the most you are willing to risk on any one trade. Most experienced traders recommend that novice traders limit their risk per trade to 1% of account balance (or 2% at the most). If you have a $2,000 account, this means a limit of $20 to $40 at risk on any one trade.
Your stop-loss (in pips) should be determined based on price action and market structure — not on fitting a certain position size into your trade plan. In other words, what you see on your chart — not what you see in your account — should determine where your stop-loss should be placed. If your chart suggests a stop-loss that you are not comfortable with, that’s your clue to abandon this trade and look for a better one. Prudently determined stop-losses are usually not nice, round numbers. They might be 18 pips, or 29 pips, or 43 pips, etc. Blindly slapping a 20-pip, or 30-pip, or 50-pip stop-loss on a new position — because you don’t have a better idea — is a recipe for unnecessarily large losses, or early stop-outs.
After you have prudently chosen a risk percentage, and sensibly determined your stop-loss, all you have to do is equate the two. This will yield the position size which is appropriate for your trade. You can do that by hand; and, as part of your forex education, you should learn how to do it by hand. But, in practice, it’s a lot easier and more reliable to use a Position Size Calculator to crunch the numbers.
Notice that the description above made no mention of your trading style (scalping, day trading, swing trading, etc.), and no mention of the chart time-frame you might be using to plan and manage your trade. Those issues relate to your second question. Allow me to rephrase it —
• Which chart time-frame should you be using?
I want to encourage you to learn the concept of multi-time-frame chart analysis. That means utilizing 3 related time-frames to find, confirm, and enter each trade. Without attempting to teach a lesson on multi-time-frame chart analysis, I will simply leave it to you to research it and learn it.
Okay, but which 3 time-frames?
The anticipated duration of your trade will determine (1) the time-frames you should employ, and (2) the size of your stop-loss and profit target. And all of that will define your trading style. Let’s put some metrics on these labels, with the caveat that these labels and metrics are somewhat subjective: different traders might define things differently. These are my labels and my metrics (from a previous post) —
In your post, you didn’t specify whether you are talking about a $2,000 [I]live account,[/I] or a $2,000 [I]demo account.[/I]
If you are talking about opening a live account, I suggest you step away from that idea, until (1) you have studied this business enough to answer your own newbie questions, (2) you have learned the mechanics of opening, managing and closing trades in a demo account, and (3) you have determined the trading style that suits your risk tolerance, your temperament, and your time availability.
When those prerequisites have been met, then you are ready to open a [I]tiny[/I] live account with a broker who will allow you to trade in [I]tiny[/I] position sizes. How big is [I]tiny?[/I] I would suggest you open a live account with $500 (not $2,000 or $3,000), and plan on trading one micro-lot at a time. Better yet, open a $200 account with Oanda, where you can trade in unit-amounts. In other words, rather than whole numbers of micro-lots (1,000 units, 2,000 units, etc.), with a unit account you can trade 550 units, or 125 units, or 47 units, etc. The Position Size Calculator will calculate exact numbers of units for you.
Assume that after you have made all the usual rookie mistakes, you will have lost all (or most) of your first live account. Given that assumption, why would you plan on losing $2,000 or $3,000 — when you could get the same education in the “school of hard knocks” losing just a fraction of that?
.
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Hi!
Thank you all for your responses. very helpful indeed. I am studying the lessons in the babypips SCHOOL plus a few articles and lessons on the internet.
I opened a demo account this week and today I applied all the skills learned using leading and lagging indicators.
thanks Toekan. I’ll look into those.
Forgot about demo you’ll lose on live account 
It’s completely different. Though for example my Hotforex demo account mirrors live trading conditions except slippage, when you trade on live you have less trading deposit and what’s more important your EMOTIONS is brought into play. They can be that silent fantom that always stand right after you and force you to make wrong decision, a virus which is hard to cure from. You’ll blame trading strategy, your broker, etc. but the problem was with your greed and fears.
Try live and you’ll understand me.
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