Before that, if i’m willing to open an account with the balance of $1000, in order not to blow my account, how much should each trade be out of this $1000? or do i trade with the whole thing but have a SL of 1%-2%?
Also, as a beginner, what percentage am i realistically expecting each trade ? if every trade is worth around $200-300 ?
You’re putting the cart before the horse.
By focusing on “how much money can I make” you’re spending energy on the wrong metric.
You need to first come up with a repeatable strategy- trading in a live account for > 6 months with real money. Trade what you can afford to lose, b/c you will lose it all.
Eventually, you can scale your account balance up.
But what’s more ideal throwing a full $1000 in a trade or go with 25% of the balance, if so, what does this equation depend on?
Your sensitivity to risk is going to be different than everyone else’s.
I can’t tell you how much to risk per trade.
You need to figure that out on your own, by trading with a live account- making adjustments along the way.
If you’re highly accurate > 80% you can maybe risk more.
If you’re not that accurate, say, < 40%, you’d prob want to risk less (because of volumes).
If you’re not that accurate, you need to make sure that your Reward > Risk- or, you’ll simply blow your account. Even if you are accurate, it’s all about avg winner vs. avg loser and how that ratio couples with risk per trade to formulate your risk of ruin.
You are going in with a relatively small amount, I did the same in GBP slightly more than you, first find a broker that will let you trade in small amounts, I can only relate to the British market, however my broker allows trade as small as 10p, and this is one of the keys only trade 1% of your account.
OK it’s not going to make you a millionaire but this a marathon not a sprint.
But trading is all about minimising your risk, always protect your capital.
This allows you to trade a lot longer and also remember trading is about compounding your winning trades , I disagree with one comment on here, if you manage your capital and minimise your losses you have a better chance of not losing your bank.
I’ve been trading 10 months and although in the earlier days of trading I dipped slightly below my initial capital, I’m now trading and my account is 23.6% up.
Never say never but my trading is going from strength so unless I become reckless then I only see my account growing, and by the way I still only risk 1% to 2% of my account, I also know day to day what I could lose to take me back to my original bank.
Each trade should be equal to 1% of your account. So for a $1000 you can risk $10 per trade ie the most you lose per trade is $10. When you are consistently profitable you can either add more money to your account or move upto 2% per trade and that’s the highest.
Few things. The general guidance is 1-2% risk per trade. Depending on the pair and the pips tip hit SL a calculator will tell you what lot size that equates to.
Also in terms of return look to stick to trades that provide at least a 1:3 risk reward if you can as with only a 30% strike rate you would still be up overall.
As a beginner, you can expect losses.
Your first objective is to protect your capital from loss to gain experience and develop your edge.
Start with 1% risk, (or less) until you can prove to yourself that you can consistently make money. 100 trades is the minimum sample size that has some significance in my opinion.
What is 1% risk on $1000 account? roughly speaking, it is 100 pips stop loss on the minimum trade volume (0.01 lot). This is a significant margin for error for most currency pairs.
After 100 trades, you will have data to know whether you can increase the risk without running the risk of ruin and how much ROI you can expect. You will be able to work out your win rate, average win amount, average loss amount, draw down etc…You will know if you can tighten your stop loss, increase your volume and how accurate your signals are.
Without this data, you cant make any informed decisions about your trading operation and neither can anyone else.
Expect a negative ROI if you dont have any track record.
There is two ways to learn about your style of trading comfortably.
I started trading personally around 8 years ago, and my advice varies a fair bit from the other folks on here…
When I began, I came from a gambling background and figured I could just start with £500 or so and be a millionaire within a few years! I tried various education sites, various signal providers, automated systems etc
I lost my £500, I then tried again with £2000 or so and lost that too, then multiple further deposits over the years.
In hindsight I shouldn’t have deposited anything for the first 6 years. I should have stuck to demo.
This doesn’t mean it will take you 6 years to learn, in truth once I ‘got it’ it only took me a couple of weeks to come up with a winning system I have be compounding ever since.
Start with a demo account. Forget trendlines, support and resistance, Fibonacci, rsi, macd and anything else that is constantly mentioned by those selling services. Download trading view and play around with as many other indicators as you can. (Start with ichimoku) Backtest your ideas and then forward test them with your demo account. If you put enough work in you will find something that gives you a 70%-80% success rate. Once there you are ready to deposit and off you go.
Great advice. I’m also new to trading ( very beginning) and currently researching UK brokers and potential training courses/mentors, for when I’ve finished the babypips training and the forex peace army training.
Which broker have you gone for if you don’t mind me asking? And did you do any course or have a mentor?
Any advice would be greatly appreciated!
Hi mate, trade with ETX Capital, I’ve not read the rules on the forum, I can put you in touch with the people I used to put me with the right broker, they will look at the amount of money you want to trade with and set you up with the right broker.
I bought an off the shelf package to trade, the company has been around for 17 years so I had followed there progress for along time before i made the leap and parted with my money, however it was not the be end and end all, despite the follow up workshops and support and I have read, digested and regurgitated books, online material, anything to broaden my knowledge.
Because what the training can’t prepare you for is the psychology of trading.
If you play golf then I can only equate to the same sort of emotions, but add in fear and greed, play a good shot you feel a million dollars, hole the ball of your first putt, slice, find the water, can’t find your ball in the rough, mentally beat yourself up because you knew what to do but couldn’t execute it, you get the picture.
And remember for every trade you place, someone is trading the dead opposite to you and hoping the market moves against you to stop you out or abandon your trade.
So all the best, but as I said the main goal is to keep your bank intact, trade small, put stop loss at level which keeps you safe, but allows for your take a reasonable profit, don’t get greedy when your successful, but don’t fear placing a trade when your trades don’t go your way, don’t chase losses, compound your wins and if you go through a bad streak and all traders have a bad run, pull out, shut down your computer, go away review your trading plan and study a bit more, you’ll pick up something that will make you re-evaluate your trading style, plan , what indicators you maybe using, whatever sparks your mojo, and go back in refreshed and mentally on top of your game.
Hope this helps.
Trading is painful whatever level your at, it took me a long time to get over the mental anguish that comes with FX, I now use golf psychology, and although i trade live, the adage is the more I trade the better I get.
However Like all golfers there are times when the course doesn’t play in my favour, then I go off and visualise and remember the successful trades I’ve had, go over my log (scorecard in golf) and see what holes I played well and why.
Trade well my friend and may the trend always be in your favour.
Completely understand. Thanks so much for putting that together mate, really appreciate it! There’s some great points here, and although I have a long road ahead this definitely helps steer me in the right direction.
All the best!
Good luck mate.
i suppose u want the truth. its bitter though. as a newbie, u r going to make losses no matter what u do. forget abt profits for now. just assume in ur mind that the losses u r making is school fees being paid to learn forex. u will probably make losses in ur first 2 yrs. the reason is that the biggest thing u need to learn in forex is to totally remove emotions from ur trading. it takes years to achieve this.
Hi,
which uk broker do you use with you being able to trade 10p as my minimum is 50p.
Thanks
I trade with ETX Capital, my account was set up through a third party, not sure if they have preferential rates due to the volume of business they put there way.
You should focus on learning and practicing on demo accounts. Get in to the trader mentality and spend your energy on right places. There is no easy money. You lose some and you win some. Prepare your psychology to deal with stressful decision making.
As a beginner, you should learn how to trade and focus on ways to make your trading better instead of ROI. Hence, at the initial stages chances of losing is more than earning profits.
Good luck mate!