Hello guys, I have my first 500 bucks to invest and before i pop up my real account with my broker, i want to know what leverage size would be suitable for 500 bucks provided with should i go for a standard account or a mini account ?
P.S. i have been practicing on both standard and mini demo accounts and have earned sufficient pips …
Are you serious? $500 to fund a standard account?
Let’s look at the numbers. A “standard account” is an account in which you can trade whole numbers of standard lots — one standard lot, 2 standard lots, etc. If you trade the smallest possible position size in this account (1 standard lot), then you are taking a $100,000 position with $500 in capital. In other words, you are using 200:1 actual leverage.
Let’s say that your broker allows you to use up to 1000:1 leverage. This means (in most cases) that he will require 1/10 of 1% of the notional value of your position as MARGIN. 1/10 of 1% of $100,000 is $100. That amount ($100) will be set aside as MARGIN for the duration of your trade, leaving only $400 of your real money to cover the spread plus any losses which may occur while your trade is open.
$400 will cover only 40 pips of price movement against you (spread + losses), because every pip in a standard lot earns (or costs) you $10. If the spread on your position is 2 pips, then you are 38 pips away from a MARGIN CALL.
Do you think this sounds like good money management?
If your broker allows you to use LESS than 1000:1 leverage in this standard account, then your risk of a MARGIN CALL will be even greater than above.
If you fund a mini account with $500, your situation will be less dire. As an exercise, work out the numbers for yourself, in a scenario similar to the one outlined above.
In my opinion, with only $500 to start with, you should open a micro account, in which you can trade in .01 lot sizes (1/100 of a standard lot, equal to 1,000 units of currency). Or, better yet, open a nano account (minimum trade size 100 units of currency), or a unit account (minimum trade size 1 unit of currency).
If you have a choice of broker leverage (the maximum allowable leverage offered to you by your broker), choose the highest leverage you can get. 100:1 is workable. 200:1 is better. 400:1 is better yet. And so forth.
Then forget about leverage altogether. On every trade that you take, limit your risk to a small percentage of your account balance; do this by controlling your position size, and the actual leverage you are using will take care of itself.
A micro account would be better. I used a leverage of 200:1 for my first micro account and it was just perfect. There will be less risk if you choose your leverage wisely. Since your capital is small, you have be less greedy and trade patiently, while you increase in profit.
This guy’s right. Go for a micro account. I would also add that with $500 you won’t be able to trade too well. You’ll risk too much most of the time. Treat this account as a first test of your skills, then I would suggest you put some more $$$ into it!
You can’t go for standard account with 500 bucks. Only option is the mini account. So don’t trade above 0.02 with the $500 as I have very good experience trading higher lots with a $500 account way back in time. 
I agree with the above, go mini or smaller as you do not have the required capital for a standard account. When it comes to leverage, it really does not matter as long as your risk management is good.
In a micro account , value of 1 pip would be equal to 0.1 $ if i am not wrong.
The broker i have been practicing with has just standard and eurica types of accounts .
Actually i am a bit afraid of losing my savings, i can invest upto 1000 USD. So should i pop up my account with all 1000 $.
[B]Fear, at this stage, is a very useful thing[/B] — it’s telling you [I][U]don’t do it.[/U][/I] If you’re afraid of losing your hard-earned money, then you have no business putting it at risk in the forex market.
[B]But, if you take fear with you into the trading arena, it will not be a useful thing[/B] — it will be a very destructive thing. It will sabotage your trading, and all but guarantee your failure.
Absolutely not. Figure out [B]what amount of real money[/B] does not cause you to fear loss. Maybe it’s the $500 you asked about previously. Maybe it’s an even smaller amount.
Let’s say that your fear threshold is at the $250 level. In other words, you could write off a $250 loss without emotional difficulties, but a loss greater than $250 would cause you serious stress. You have just determined the maximum amount that you should start with, in your first live account.
Now, your task is to find a broker you trust who offers a retail forex account compatible with your tiny starting balance. This means an account in which you can trade tiny position sizes — say, position sizes which are no more than 5 times your starting balance.
Five times your starting balance ($250 in this example) would be $1,250. In a [B]micro account,[/B] you could trade position sizes of $1,000 (one micro-lot) without exceeding the $1,250 limit.
But, a [B]nano account,[/B] or a [B]unit account,[/B] would give you much more flexibility in fine-tuning your position sizes.
Micro accounts are rather common, so finding a good broker who offers such an account is fairly easy. Nano accounts are less common; and unit accounts (some brokers call them “cent accounts”) are relatively scarce. So, it’s probably time for you to roll up your sleeves, and do some serious due diligence.
Prove to yourself that you can successfully trade a unit account, or a nano account, or a micro account, before you even consider putting a larger sum of money into a mini account, or a standard account. If you can survive for 6 months, or more, placing a statistically significant number of trades, and growing your tiny account by 10% or more, then you might be ready to deposit a bit more of your savings, and begin to trade slightly larger position sizes.
As your confidence grows, your fear threshold should rise. When you have proved to yourself that you can successfully trade $250 of your savings — then trading $350 or even $500 of your savings should cease to frighten you.
When you become totally confident in your ability to trade, committing all of your $1,000 of savings to trading should no longer be an emotional problem.
I find the biggest problem - you get bored trading 0.01
When I started I was making and losing $5-$10
When I was wrong I had no though that I should correct my idea . " oh I was down $10 " I didn’t really care
So I increase it to at least 0.05 so when I lost $50 I would be annoyed with my self and look at the mistake I e made .
" yea I shouldn’t of open that trade knowing bad news was coming " or " yea I see that was a bad trade " or " yea I got to greedy and should of waited "
When I first started I never study and treated my broker as a online casino
My mistake first trading was starting with $500 account and making alot of bad trade ( 50%) for over a year . It took about 12 months to lose my whole account before learnt that I should read and learn and study
A friends told me to try again but trade large lots
If you trade with at least 0.05 per $500 . After a few bad trade you mite be down $250 … You will realize quickly that your doing sone thing wrong .
Either look up and study or stop completely
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With $500, a trader might want to consider a leverage of 200:1 because it is the average leverage where the risk is moderate. Since your capital is low, I will also advice you to use a small lot size. 2% of your account is enough for trading.
It comes down to risk management, leverage does not matter.