Appreciate your answeres, many thanks.
Still having trouble getting my head around the leverage/size of lots etc. I have a demo account with a broker that offers microlots and when opening a position I open with 1% of balance ie. 1000� account = 0.10 lot. Is this about right for a small account of this size. Sorry but maths was never my best subject!
1% of 1000 EUR = 10EUR
1 standard lot = 100,000 units
if you’re buying something with the EUR as the base currency, 1 lot would be equal to 100,000EUR. Technically, 10EUR of this would be 0.0001 lots. But with a leverage of 100:1 (varies from broker to broker) it would make that 0.0001 * 100 = 0.01 lots
I believe this is right 
Jigjag, I understand that no one wants to hear that it is very common to blow your first couple of accounts.:eek: But every forex trader I know has done it, including the successful ones that introduced forex to me. I know that when I was switching from demo to live, I would have never thought that I would do it. I had my system down, I was doubling demos in 4 to 5 weeks consistently, I knew the markets and my charts…YEAH RIGHT! There are a few common reasons why newbies blow their first accounts and I’m not only going to tell you what they are but I’m also going to tell you how I overcame them. 1.) Account size. Unfortunately, most newbies are also very young, anywhere from 18 to 26 it seems. This means that they haven’t been in the career world long enough to have a large savings account or instruments like CD’s or a substanial portfolio. So what happens, is they start out with $1000 to $2000. This is very bad, because the account is not big enough to absorb bad trades. And I don’t care how great you are in demo, you will have bad trades live. You’ll forget to put your s/l, you’ll forget to check if your entry was right before a major news release, or you’ll leave your computer to take a leak and you come back to a 70 pip drop etc. I would not suggest going live with anything less than $5k. That is not what 90% of newbies want to hear, but that’s why 90% of newbies fail at this game. Don’t believe the software programers and the guys trying to sell you automated EA’s that promise you that you can turn $500 into $1M in a year…Ain’t Happening Chico! If you don’t have $5k, I would push your live date back until you get it. The Forex market isn’t going anywhere and you’ll glad that you did. Also, money management is a big player in is regard. My rule is no one trade is greater than 3% of the account balance and if I have multiple positions then the whole sum is not greater than 4%. Figure out what works best for you, but I found these percentages allows the market some wiggle room without you taking massive losses. 2.) Overtrading. Many traders, including myself, are type-A personalities where they feel that they have to “be in the action” or if they’re not trading then they’re not making money or they just like the thrill of trading. Its the same as being up big in vegas. If you were an intelligent human being, you would put your winnings in your pocket and leave the tables. But you don’t, you stay and give it back to the house. Forex is no different. Trading out of boredom when there’s no trade is an absolute account killer. How to combat this? I set up a demo account along side of my live account. Any trade that I’m not 80% sure of gets demo’d. If I know the market is sideways, but I just have to trade, I demo it. If I have a 50 to 60% hunch on a trade or I’m playing a news release trade–i demo it. So set up a demo account to curb overtrading. Also, have a daily profit goal, once you hit that goal, turn off your live account and switch to demo—NO EXCEPTIONS. 3.) Emotions, this unfortunately is something that demo trading can not teach you. As I mentioned in my last post, there are several emotional trades once you go live that will put your account in grave danger. Increasing lot size to gain back losses, closing out early when you see a baby retracement, second guessing your system because its live money etc etc etc. The best investors are discplined, patient and they have their emotions under control. So how did I overcome my emotion and get my head out of the exit? Simple, I run two EA’s on my platform. One is a profit target EA and the other is a max loss EA. I learned from blowing my first account that I am great at entries, the emotions is what screwed up my exits. So to shift the odds back into my strong suit, I set it up to where the exits become automated, allowing me to profit from my great entries. I wouldn’t have learned this without blowing my first live account.
You definitely don’t want to hear this, but blowing your live account is an invalueable learning experience. I do not wish that upon you of course, but if it happens, embrace it, pick it apart and learn from every aspect of it. Blowing your account will show you what type of investor you are. What your emotions like? Do you have grace under pressure? Do you get real negative or real positive in a hot kitchen? Can you still dream big in the face of massive losses?etc etc…Only great adversity will show you who you really are inside. Once you know who you really are (not who you think you are), then your system should revolve around that new-found knowledge. Usually the way life works is that you have to get your ass kicked a couple of times to learn how to fight. So don’t be scared of lossing your account, it will affect your trading. Remember, forex is a marathon, its not a sprint. If you complete the marathon, you will be exempt from the economy crisis that is happening right now and in the future. You will have a massive retirement account to support your standard of living and your family’s standard. There are no limits in this industry, so get rid of your fears and think marathon. I hope I’ve helped. Good fortunate to you in your new business venture. Pipbull!
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pipbull excellent post. I agree %100. I definatly blew 2 accounts and even today I always learn from my losses. Last week I took a beating but it only forced me to evaluate my trading plan and my money management so it was a good and necessary evil. Anyway great advice all noobies should take note!
Before you even consider trading live these are the questions that need to
be answered. You should at this moment be looking at your demo account & saying, if I place a trade of 1 standard lot, how much will it cost me?
Usually 1 standard lot = $10/pip or if you have a Euro account it will
probably be $10/(Eur/Usd exchange rate) approx. 7 Euros/pip.
Now to trade effectively with 1 000 Euros you will need to trade a micro account.
1 standard lot divided by 100 so your pip vale would be approx. 0.07 Euros.
Therefore 10 Euros divided by 0.07 Euros = 142 pips/ trade.
Conversely if you were to have a 100 pip stop loss, then you would
trade 10 Euros divided by 100 = 0.1 Euros/ pip.
Sorry but maths was never my best subject!
Economics was never my favorite subject but I learnt quickly when
it was my money at stake.
Further reading.
$25 a week on a $250 dollar account is 10% of the account. If you can turn 10% a week, I promise that you are never going to need to worry about money again.
My suggestion: Quit watching your account balance. If your broker will allow you to turn it off where you can’t see it, all the better. Then check it once a week and don’t even pay attention to the number, just look at the percentage gain or loss. That is whats important over the long run.
Happy Pipping!
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I think with one or two of the trading strategies I’m using (all now “indicator-less”…all price driven) the 10%/week is very obtainable. I also wrote a script that I place on a chart once my trades are open. I can set it for a percentage of my account balance (separate for TP and SL) or for a specific dollar amount. As long as I have a few trades open, I find that hitting a small, reasonable goal every day is doable. Some may go against me, but as long as the + outweighs the - I’m fine. What I can’t do is sit and watch every tick…makes me nuts. I trade long term, but until my balance is enough to handle a little more daily retracement here and there, I place my trades as I would for long term, but exit with a short term goal. Having the script close everything at that point takes any emotions out of it and allows me the freedom to not be glued to my computer.
Your exactly right, you CANNOT “Pipwatch.” Or at least, I can’t. Your playing a dangerous game psychologically.
Forex is a beast that can bite your head off - Its best not to look at the teeth!
Pipbull821- Cant thank you enough for your time and trouble spent giving me all this advise. I�ve made notes and hope I am still around(with a live account) in the not too distant future to let you know how things are going. Just one piece of advise that I dont think I can take and that is to wait around until I can open a larger account. I really cant see that being a possibility. However, just one more question for the moment that I would be interested to hear your or other members ideas on.
What is the best leverage to get when opeing a small live account. My demo is 1:100 Is this feasable for an account of 1000�.
I couldn’t agree with you more!!!
Hello GBLilley,
You are right that no body would tell his account online. But i would say that in 100 their could be only 2-3% persons who have doubled their account through forex. And those persons are who trade with knowledge and hold their nerves during trading.
I have been in forex and seen persons earning in forex market and also person losing their hard earned money in few days. I am also trading the forex market and i am having an account in AVAFX. I know there are many persons who say no this broker is not good the other is ok. But i don’t agree with this. If you are confident in your self and having proper knowledge and trading strategies you win this market. The broker is with you for a support or some advices but the rest you have to do. I had opened my account i searched about the broker and went for it. I saw all the facilities my broker provided but i opened my account as i am having my own trading strategy and skills. I trade for on $30-40 per day and not more than that in this way i keep trading double my money.
When i started trading in forex my friends told don’t enter this market it is false and will eat your hard earned money. But i told if i am confident and cautious no one can eat. And today i am successfully trading.
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Unless I’m overlooking something, is the recommended minimum account balance not necessarily applicable when using a broker like Oanda, who have flexible lot sizes?
In other words, I often read that $5000 is the bare minimum you’d want to have to set up a mini account. But if I can trade lots of any size I want, I can start live trading with a balance of whatever size I am comfortable with or capable of trading. Before taking a trade, I determine the appropriate stop loss in pips; then I do the math to figure out what size lot would have that stop loss be 1% of my account (or whatever percentage I am risking).
Example: I could set up a $500 account. I want to risk 1% per trade ($5). For a particular trade, I see that the appropriate stop loss would be 30 pips. Doing the math, that means my lot size for that trade would be 1,667. Another trade might have a stop loss of 60 pips, so the lot size for that one would be a paltry 833. I am still getting the experience of live trading, but can do so with money I can afford to lose, and can base my trades on pips and risk percentage, so it would take many, many losses to blow out my account.
Unless I’m overlooking something, is the recommended minimum account balance not necessarily applicable when using a broker like Oanda, who have flexible lot sizes?
That’s correct. Oanda uses what they call “units” instead of lots. One unit is equal to 1/100 of a penny, so if you wanted you could open an account with as little as $1 and trade fractions of a penny per pip!
I started on Oanda with $50 and traded for a few weeks until I felt comfortable adding more, and I suggest you do the same.
A unit is a 1:1 of the pairs you are trading. In whole dollars not pennys thats the pips not the units
A unit is a 1:1 of the pairs you are trading. In whole dollars not pennys thats the pips not the units
I think you’re misunderstanding what I’m saying. If you trade one unit you are trading about 1/100 of a penny per pip, depending on the pair.
I’m just trying to show that with Oanda you can use proper money management rules even with an extremely small account.
At Oanda you basically do not need to know what a standard,
mini or micro lot is.
But when you go to other brokers who only trade in lots or tenths
of lots etc., it is a good idea to find out quickly what standard, mini
or micro lot means.
A mini lot is generally 10 000 units or 0.1 standard lot, now that
equates to trading at $1/pip approx. (depending upon which pair
you are trading).
Therefore to trade a mini lot account you would need a lot more
than $500 to stay within the 1% rule.
Hello datdreamer65,
You are saying correct. But it is not so it depends broker to broker what they are charging the commission or fees and what rues they are having to trade in a mini and a standard lot.
As am also having an account and trading commodities. But what you have mentioned i have found it with different brokers. What facility or charges my broker AVAFX is taking is different from other brokers.
Brokers like Oanda, which are money makers, make their profit from
the spread, on a micro account it would be cents/trade, mini
account dollars/trade, standard account tens of dollars/trade.
AVAFX are a market maker & charge on the same lines as Oanda,
from their site,"**Avafx is compensated through the difference between the buy and sell prices"
AVAFX are also from Cyprus & I couldn’t see who they were regulated by???
Here is a story for you, i traded for nearly a year lost 500$ didnt follow indicators, patterns, trends or bots. I had no idea what i was doing last year by the way, now I am consitently profiting 3% avg per day compounded. Yes there are still days recently in fact that i had a 15% account lost in one day but made it up within 3 days and more. My profit range daily is roughly 6-10% of the account daily and loss which occurs once a week is between 8-15%. But since I found out about babypips and learned alot more on my own, I have almost profited every single week i would say one week out of 2 month i have a loss for that week but i know its just a bad week and i get my head on strait during the weekend and continue tradeing after that. I almost have up on trading after i failed during that first year but im addicted to trading or gambling with a assessed risk involved that you should know when to manage your funds. I learn more from videos more than anything but this site is great with information,
congrats and remember, everyone blows up at least 1 account before going on to being successful