Ready to move into the Big-Leagues

First of all, I’d like to thank those who make and maintain this site – I’m quite impressed (and that’s coming from an IT pro :wink: )

Now, on to business. I’ve been profitably trading on demo accounts for a couple months now (I’ve been mainly using Interbank FX). I have a good system in place with proper equity management and risk/reward ratios. I’ve been having the most luck using fibonacci retracements/extensions at convergance points with trendlines/oscilators/et. al. I have good trading discipline and have a checklist that I use for any trade. I really feel it’s time to move on to a live account. (I would have made A LOT of money in the last week if my demo was real).

Here are some concerns. A lot of my concerns were mirrored in the Can we really WIN? Thread. Now, it was my belief that brokers made their money off spreads (which I understand can change under certain market conditions). Now, is there any validity to these claims of brokers working against their clients? I really have trouble believing this, it makes no sense. They would make more money by keeping clients, thus having them place more trades and getting more pips from spreads. Pushing them out of the market seems to be counter-intuitive.

Next question (and probably my most important): Is it common for an investor to lose more than their initial investment? I’m about to open a $1000 USD mini account. How worried should I be about losing more than that $1000? I’m completely prepared to take responsibility for losing all of that investment if I get a margin call. My only worry lies in that I could be liable for more than the $1000 if things get ugly. I always have stop-losses set. Can anyone comment on this?

And finally, is my method of intra-day trading considered “scalping”? I typically only make a couple of trades a day on different pairs, using the methods I explained above. I’m afraid my trading will be viewed as negative by the brokers I deal with.

Thanks for any answers* in advance!

Alright, well I answered my last question there about scalping. According to the definitions I’ve seen, my method isn’t scalping.

Still would love some advice regarding my other questions though!

1,000 USD on a mini is suicide! With only risking 1% per trade you can withstand a 10 pip move on a XXXvsUSD pair before hitting your stop. When is a 10 pip stop good enough? Did you forget about the spread? Add in the spread, now it is to a 7 pip stop! Unless you are scalping I doubt 7 pips of breathing room is enough.

Did you forget about the recommendation from from their margin lesson. 1,000 USD = Micro and 10,000 USD = Mini, these are valid recommendations and I support them 99%! I believe my trading style will allow a single mini contract with 2,000 USD. Still put this in perspective. 1 mini contract at 1% is still just a 20 pip move against you. I think I can deal with 20 pip move. Regardless a micro account is still best because you can increase in increments of 1,000 compared to 10,000. So micro, micro, micro, even if you can trade a mini lot size because you surely can not increase your lots 10,000 at a time with anything under 10,000 USD!

If you have not read Tharp’s Trade your Way to Financial Freedom I suggest you do so. It is a great book and will help put things in perspective.

But hey, do what you think is best. If you think you can handle a mini account while being so under capitalized by all means go ahead. Maybe you will get lucky and work your way up with that single mini contract and you can prove everyone wrong. Not trying to be an ass but it just pisses me off when people ignore sound advice that is right in front of them!

Opening a mini account with $1000 is extremely risk and I recommend that you read our lesson on Leverage in our School section - especially about the part on undercapitalization.

I’ll consider the advice on going with a micro instead of a mini. I’m a recent college grad, so coming up with $10k just isn’t possible at this point in time.
I’ve been working with 2 demo accounts on 2 platforms, both $1k minis, and both have had great success, so I thought that was a good indication I was ready to mimic it with some real capital.

I’m still seeking advice on my other questions though – mainly regarding whether or not it’s common to lose more than your investment.


You want to go micro because you can increase your lot size by 1,000 as compared to 10,000. If you go with mini at $1,000 you going to be trading a 10,000 lot forever. Personally I am trading a micro lot per $200 USD of capital. This makes me able to withstand a 20 pip move on EURvsUSD. But say 20 pip stop won’t do it for me? Then I just decrease by a lot and what do you know I have 10 more pips of breathing room. So go micro no matter what even if you are trading a five 1,000 lots!

I would like to see what the babypips team thinks of my idea of 1 micro lot per $200 capital. I am thinking of bumping it up to 1 micro lot per $300. But I figure your worst case stop loss will fluctuate with the market. If your stop isn’t a constant then you can be more adaptive with your lot size while still only risking 1%.

Also, success on a demo may be hard to mimic on a live account. Thus you should start smaller. If you are strapped for cash you should defiantly start smaller. If you only have $1,000 USD to invest you can make that last longer with a micro.

If you wanted to try Oanda, they allow you to trade any size lot. You adjust to your wants.

I opened up a FXGame account on Oanda. I must admit though, their software isn’t up to par relative to others that I’ve used (Interbankfx’s software is incredible). I understand the importance of web-based platforms, but I don’t want one, especially a slow java applet. Oh well, perhaps I’ll subscribe to a charting service and use Oanda for trades. Any recommendations on that?

If you are really set on MT4 just demo on interbankfx. Personally Oanda’s platform is one of the better java platforms out there.

I’m a big fan of Oanda for a couple of reasons. Variable trade size is a big one, which makes it perfect for small account traders. The other is the 100% electronic nature of the platform. There is no human interaction with prices or orders, so your concerns about brokers messing around, running stops, etc. can be left behind. (By the way, I’m not one who believes that these sorts of things happen nearly as often as some traders would have you believe. Strikes me as an excuse made up to shift blame away from poor trading.)

As for speed, I’ve used different platforms at different times and never found Oanda to be slow. I don’t scalp or really short-term trade, though, so maybe I just haven’t really pushed it hard enough in that regard.

It is possible to use one charting package to signal trades for a seperate broker, but probably not if you were trading really short-term just because of the differences in prices that you will see. If you’re using charts longer-term than say 10 minutes, though, you’d probably be fine.

You’d asked about losing more than you initial $1000. While technically that is possible in forex trading, most brokers these days will not let it happen. They will automatically stop you out when your account value drops below the margin requirements for holding the position(s) in question. Not all will do this, though. That’s something you would have to check in to for any broker you were planning on using.

On that topic, though, if you are trading a position that has you at risk of losing your full account balance then there’s a serious problem with your risk management.

Hi Neeby:

I can say, unfortunately, from experience that InterbankFX will not allow you to lose your entire account on a margin call. 50% is the cut off point. For example, if you have $4,000 in your account (or $40,000 for that matter, the math’s the same) and get a margin call you’ll loose 50% and maybe a bit more if the market’s volatile. To actually lose everything it takes persistent determination in the pursuit of horrible risk/money management; e.g., multiple margin calls.

By the way, my risk management skills/discipline (ability to trade instead of allowing myself to gamble) has done a 180% turn since those dark days - back when things were rotten, really rotten :o