How did you guys lose your first account? what happened?
I don’t think splitting the money is that good of an idea since $1000 isn’t a lot in the first place for forex and less balance is less margin. As long as there is stop loss it should be fine right?
Alderney,
You might want to read up on this to see why I dont recommend putting all your eggs in one basket
isn’t that what stop loss is for?
No. Your stop loss is where you would [B]like[/B] your broker to close your trade if it goes against you. However, and this should be in your brokers T and C’s, they cannot guarantee this will be possible due to liquidity, or lack of it.
In the case of a Black Swan event, prices dropped so fast the brokers where unable to close trades and many traders lost their entire accounts, some even went into negative equity and had brokers chasing them for money.
This can also happen on a smaller scale over weekends and holidays when prices often gap. What basically happens is, markets close on Friday evening. Lets say you have a EurUsd trade, closing price is 1.1000 and you have a stop at 1.0980. Over the weekend there is a big negative event in Europe (political assassination, terrorism, nuclear catastrophe, etc, that sort of thing). When the markets open on Monday the EurUsd opens at 1.0800. Your broker clearly cant guarantee your stop of 1.0980 so he closes your trade as soon as possible, leaving you with approx 180 pips slippage.
Obviously, these events are very unlikely but not impossible, so we need to try and protect our money as much as we can
In that case wouldn’t broker be liable?
How can they chase you for money it’s their mistake they didn’t close the order even with stop loss set.
And aren’t trades automated? is there some one actually sitting there closing trades everyone trades manually?
that’s not a very good broker if they have that in their T&C
It’s not the brokers fault, they lose out and a number went out of business following the Swiss black swan event. Others, like fxcm, lost hundreds of millions.
It is not a foregone conclusion that a new trader will lose their account. Most cases of consistent losing are due to lack of professionalism, inconsistency, non-existent funds management, and plain reckless “cowboy” (over)trading that is more akin to gambling than running a business. As an individual trader you are a self-employed businessman and your approach to your trading should reflect that. You need to learn your business and your own “product” within your market sector (i.e. your trading profile: exposure, targets, loss management, timeframes, trading hours, currencies, techniques, and so on and so on).
No, it is not right. You can only stop out a position if there is a corresponding bid/offer available. Usually, there is sufficient liquidity in the main currencies to provide these. However, there is no guarantee. As Eddieb mentions, if there is a sudden major event affecting currency markets then there may not be a bid/offer for hundreds of pips. Fortunately, these types of events are rare. Also, price continuity can be seriously disrupted during periods when the markets are either closed or very thin. As you have no doubt noticed, markets do not automatically open where they previously closed. It is maybe always wise not to keep in one’s account more funds than amply cover margin requirements for the position sizes and the potential losses that one is prepared to run on open positions (to avoid automatic closure and realisation of losses).
Personally, I think a new (live) trader should always start with micro lots and on the longest timeframe they can financially stand. Anything less than 15 min charts are cluttered with erratic, meaningless movements and even when a longer move starts it does not go very far on 5m or 1m charts before a reverse signal closes it. They are also extremely frustrating and exhausting to watch so intently, especially when going through a period of even a few hours of inaction - and very often result in overtrading with accumulated small losses.
On the other hand, TFs of 1hr or more are more reliable but normally need to be worked with bigger profit targets AND stop levels. For some new traders, stops of 50 pips+ might be too expensive.
A new trader might find that 30/15 min TFs are a reasonable compromise providing both reasonably reliable signals and reasonable stoploss risk - epecially for day trading, which is perhaps the best starting approach for newbies… but this is an issue for each trader, new or mature, to decide for themselves.
well then if the broker went out of business what’s point of separating funds in different accounts? The broker’s gone and all accounts will be gone too.
how did you lose your first account?
what happened?
what caused it?
how much was in your first account?
Its very rare that things go so badly wrong that the broker goes bust.
The reason for splitting your account is for when the event is big enough to wipe you out, or severely damage your account like in the EurUsd example I gave. You may lose all your funds in that particular account, but other accounts would only be affected if trades within them also went against you. I use some of my other accounts purely to hold funds that I don’t wish to trade with at that time, but which I had to deposit due to brokers minimum deposit rules.
Its important as well that you use a broker who is regulated in the country you live in as this should ensure some added protection, such as they could not pursue you for negative equity.
Babypips school recommends minimum of $1000 for a micro account .
The reasons new traders fail is because they are under capitalised and over leveraged.
The less balance there is and the higher leverage the easier you hit margin close out.
The less margin there is in the account, the less the price can move around before hitting take profit.
Of course you should only put in what you are willing to lose in the account in the first place not your whole life savings.
I don’t think there is a need to divide $1000 into different accounts. If you have like thousands or millions in there then yeah keep several sub accounts for different types of trades but why would you keep money in there for savings? Withdraw it and keep it in a bank. The point of depositing money into the trading account is to trade with it and there should only be the amount of money you want to trade with in the trading account. No?
From the school:
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.
Of course, open an account only when you are consistently good.
So if you only have $60,000, open a mini account. If you only have $8,000, open a micro account. 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. If you have $1, find a job.
If you don’t remember anything else in this lesson, at least remember what you just read above.
Okay, please re-read the previous paragraph and ingrain it in your memory. Just because brokers allow you to open an account with only $25 does NOT mean you should.
Read more: Ignoring Leverage: Why Most New Forex Traders Fail
Its entirely your choice.
The way I see it, you can look at it as an extension of money management. You can keep all your money in one account and apply mm rules that give you a maximum, say, 2% risk per trade and 10% across your entire account. Then one day your stop loss fails thru no fault of yours and you lose everything.
Or you can split the account, risk 10% per trade but only 10% across your account as you only run one trade per account until your funds grow. Then when the black swan comes you only lose part of your whole, not all of it.
But, as I say, its your money not mine.
Did you lose all your money because this black swan hit you? Is that how you lost your first account?
2% risk money management can be applied to any sized account.
How much do you trade with eddieb?
I lost my first deposit with the same notion you mentioned on your post.
What happened is the same thing Mannxx said on his post.
What caused it is pretty much what eddieb is telling you not to put it in all at once.
How much you should put in on your first account is the right question 
Trading with your emotion will likely lead you to losses, and you won’t have this on demo, you can only experience this psychological effect on a live account with real money. If you’re starting out without a good grasp on what really forex trading is, you will surely loose your first account. So be warned, start small on your first account.
did stop lost failed you? how?
Isn’t $1000 the smallest you should start with?
How much do you guys usually trade with?
The only way you fail is to let a losing trade run until you get a margin call right?
No, I actually made money because of it. Pure luck, no more. I was short EurUsd, the Swiss severed their connection to the Euro and the Euro fell against every other major currency. If I’d been long EurUsd I would have lost.