Noob request : proper money management for 200 $$ account

Beginner Questions
1

i’ve been demo trading for a while and am goin live with a 200 dollars account [ alpari uk ] , the thing is i never had a proper money management in my demo accounts , so can someone pls explain proper money management for a 200 $$ account ???

and since the new NFA rules dont apply to alpari uk they still have a 500:1 levarage .

my basic plan is like this

trade a single .5 mini lot . so thats $10*500 = 5000 units = .5 $ per pip
and my Stop loss will be @ -15 pips = and initial profit taking at +20/25 pips

so with this setup even with a loosing streak of 15 trades i’ll loose probably half my account !! but on the other hand a 5 continous wins would add $50

what exactly is the proper money management for a 200 bucks account ?
what levarage and what SL/TP should i use ?

2

IMHO a proper MM is something that you feel confortable with.

in my case i have trade only 0.03 lots each time with a initial account of 2500$ (never risk more than 1% of my account), because that is what i feel confortable with.

i have double my money in 10 weeks, withdrall my initial deposit and them i start to risk 2% per trade, sometimes 3%… but that is only risk profits so i still feel confortable with it.

an advice: never open a trade that will make you feel unconfortable, because your emotions will make you do mistakes.

3

1% of my account

see i dont even get that !!! i guess according to my MM the risk is 14 % right ?

can someone pls tailor make a MM for me

so if i keep the levarage of 500 and trade .25 lots … that’ll make the risk 7 % right ?? is that good MM ??

4

Stick with your demo until you get this figured out!!

Leverage has nothing to do with this.
If your stop is hit how much money will you lose? that is risk.
Try to keep that amount(risk) less than 2% of your account balance.

5

That is good start $200.00.If your successfull you can alway put more in later.Your ratio is sound almost 2-1, never risk more than 2 percent of capital.Some in here risk more than 2 percent but they know thru experience there methods limitations.Also know yourself, what have been your limitations on trading so far how many losses have had in a row,what has been your biggest cash drawdown so far 20% or 40% percent ? When and if you hit these limits stop and take a good look at your methods before you continue on.(Good trading):slight_smile:

6

Money and risk management is fundamental to trading. It’s like the brakes to a race car driver. Without them you’re a casualty waiting to happen.

You need to read and study and understand this yourself instead of asking someone to lead you.

7

At .50 cents a pip you only have to lose 400 pips for your account to gone. Or, with a 15 pips SL 26 lost trades. That is if your don’t adjust lot size down as you lose or up as you win. (which is what you should be doing)

I know you want to make money, but your first account is really a learning account. You should be trading much, much smaller.

If your trading plan works, just compound your wins.

P.S. [B]a 15 pips SL is quite small and will be hit quite a lot on just about all the pairs, because the spread makes that sl even smaller. So, say you are trading a pair with a 4 pips spread. Now your SL is actually 11 pips. [/B]

1 Like
8

I am a proud pupil of Babypips School and i learn the next in the lesson number 9 of College:

[B]Leverage the Killer[/B]

Most professional traders and money managers trade one standard lot for every $50,000 in their account.

If they traded a mini account, this means they trade one mini lot for every $5,000 in their account.

Let that sink into your head for a couple seconds.

If pros trade like this, why do less experienced traders think they can succeed by trading 100K standard lots with a $2,000 account or 10K mini lots with $250?

No matter what the forex brokers tell you, don’t ever open a “standard account” with just $2,000 or a “mini account” with $250. The number one reason new traders fail is not because they suck, but because they are undercapitalized from the start and don’t understand how leverage really works.

Don’t set yourself up to fail.

We recommend that you have at least have $100,000 of trading capital before opening a “standard account”, $10,000 for a “mini account”, or $1,000 for a “micro account”.

So if you only have $60,000, open a “mini account. If you only have $8,000, open a “micro” account. [B]If you only have $250, open a “demo account” and stick with it until you come up with the additional $750, then open a “micro account”[/B].

Good Luck.

9

^yeah that :wink:

start a $1000 demo if you can

10

Tottally disagree. Why because there are micro/mini accounts out there that offer very small and even fractional lots. With this you can trade as small as 1 cent a pip and still use acceptable money managment.

You could use the same money managment you described.

IMO, it’s far better to start with a very small live account and trade very small lots then to trade demo. It’s a much better way to learn.

That part of babypips is often quoted and misunderstood by noobs. They quote it and take it to mean if you have 8-60 K in your account you are safe and not overleveraged. Guess what, if you don’t ACTUALLY understand LEVERAGE, MONEY MANAGMENT & POSTITION SIZING… you’ll probably overuse and abuse your available leverage and screw your self with an 8-60K account if its your first account.

11

200 bucks? 2% of 200 is 4 bucks.
You may need a bit more money, cos it’s gonna take you ages to make any real, useable, cash.

12

thanks everyone ,

i wont be going live till january , i’ve got a lot to learn before that … :smiley: …

the thing is , i wanned to try out a live account because there’s no sense of achievement (or loss) in demo trades , its like playing monopoly , nyways … thanks again …

13

The move to live trading is the key.
We can all look at charts and say to ourselves “I would have done this or that and made money” But the question is, would you have actually done it if it was real money? Would you have let the profits run? Would you have closed out immediately you saw a loss only the see the trade become profitable after all? etc.
Good luck.

14

trade in a demo account is like play monopoly.

trade in a live account without the knoledge is like gambling.

if you want risk real money go to casino. if you want to learn how to trade stick with the demo until you can gain consistent profits and them go live.

you don´t need to lose money to learn.

thats is only a advice