Hi everyone,
I trade currently 10k with only 1000 $ in my account. I thought it would be okay to trade this way, but after a few losses I’m not so sure about that anymore.
Would you suggest that I should change to micro lots?
Absolutely yes in my opinion. Keeping your risk to 2% per trade or less while also keeping reasonable stops is pretty tricky when trading mini lots with $1,000. I tried it before when using my spreadbetting account and minimum bet was €1 and I had €1,000 and found it tough to keep to my money management rules.
I usually had 5 % - 10 % risk per trade. I thought it was great until I had some losses. I could see then how fast my balance was shrinking.
Ouch, you will get margin called very very quickly and that $1000 will vanish if your trading 10k lots.
NEVER EVER EVER risk more than 2% of balance in any trade (unless you want to blow your account!)!
Personally, I keep that figure to below 0.5%. Smaller gains are better than no gains. Also, when I improve then I can slowly increase the size of account risked up to 1-2%.
Haha, I fell for that same trap when I started trading Forex. Losing in the Mini’s hurts a small account so much, I drew it down to Micro lots and felt SO much more comfortable, I’ve been building up lot sizes from there ever since.
Thanks for sharing.
I am already looking for a broker with micro lots, I see proper MM is not possible with trading minis with 1000 €.
I am just starting out with Forex coming from Futures/Equities trading. When I say I am just starting out with Forex, I mean I’ve been watching the charts since last week. To be honest, the decimal places are a bit hard to get used to, and my broker quotes 5 decimal places (pipettes) which I really just wish weren’t there.
I am going to paper trade for a few weeks until I am really comfortable with my money management rules and lot sizing. I am only trading the EURUSD and USDJPY for now (and probably all I’ll trade for the rest of the year in Forex) due to their great liquidity and tight spreads.
All of my trades for the first few months will risk .5% of my account equity. My broker has a 10,000 lot minimum, but the nice thing is I can size it however I want after that, so if I wanted 10,001 it would be fine. I’m not going to be that insane about my position sizing, but will increase it in 1,000 lots, and always round down once my .5% risk has been reached.
One thing on my list of to-do’s today is to make a spreadsheet that I will keep on my desk that I can easily reference for position sizing. Say I only want to risk 10 pips on a trade, I will reference the sheet to see how large my position can be. I base my stops off of technical levels, so my stops will vary widely depending on what the price action and S/R look like, but the account risk will always stay the same. As your account balance changes, you’ll obviously need to update the spreadsheet to increase or decrease position sizes, but if you are serious enough about trading, a tool like this is priceless.
Hope this is of some help to you!
Randy