Young Kiwi ready to learn!

Beginner Questions
1

Yo guys, i have been researching Fx trading for some time after having no luck on a demo account i have sat back and learnt as much as i can from other people and now hopefully memorised the baby pips schooling which i think is an excellent inroduction btw!!

I guess i’m going to start off with a demo account untill i’m confident and then use oanda with $1’000 and at most use 10:1 leverage, i may start off swing trading because i have two other jobs and can’t commit looking at the screen all day long, what i’m planning is putting a 20-30 pip (is that $20-$30) safety net and then if i’m right keep moving the safety net up so that when it makes it down tread i catch as much profit as possible.

I’m going to use Stastical anaylis but keep an eye on fundamentals at the same time, i have wrote my trading system down and since i’m risking a very low amount of money i will keep to it completly untill i know if it does work or not.

Anywwhooooooooooooo i’d like to welcome myself and ask if there is any recomendations you guys think i shoudl know before starting my new mission.

I’m also very interested in this yearly interest difference between currencies, has anyone tried this with success? my worry is that i lose more money due to flux then i gain in interest.

2

Many professional traders use low leverage like 10:1, but they have large account balances so they can trade multiple lots. With $1,000 balance, 10:1 may be rather limiting for you. Just my opinion, but I’d use 100:1, which is pretty much standard.

I’m assuming you mean a 20-30 pip Stop Loss. That would really depend on which currency you’re trading. Since you want to swing trade, which would mean using larger time frames, 20-30 pips will get you stopped out pretty quickly with most currencies.

I think the only way that you could get away with a 20-30 pip SL is with the shorter time frames, which would require regular monitoring. Since you can’t do that, you’ll have to increase your SL considerably to avoid getting stopped out quickly.

Terry

3

With 100:1 leverage
and 1000$ will lose.
So 10:1 is a good leverage.
Stay away from trading the news and spend a maximum with your computer to take your profits

4

LOL

I love these people who buy into the mentality that more is better and you need $5,000 - $10,000 to trade Forex.

I personally know people who have opened live accounts with $100 and $250 and are doing very well.

Oanda is perfect for the low-budget trader because you can trade any size lot and keep your losses to a minimum, which will keep you in the game without having to replenish your account.

Now, if you plan on trading standard lots (or even mini lots), that’s different. I wouldn’t recommend it. With a 100 pip Stop Loss on a standard lot you would lose $1,000 or more, so that lets you out. Even with a mini account, you would lose $100, so that’s too great a risk.

But, by using Oanda, you can trade micro lots.

Let’s look at an example, keeping in mind that the actual prices will vary:

Say you decide to go long with the EUR/USD and the current price is 1.4600. At 100:1 leverage, it will cost you $14.60 to buy 1 micro lot (0.01 standard lot, or 1,000 units in Oanda). That is 1.46% of your account. Assuming a 50% maintenance margin, your total cost would be $21.90, or 2.19% of your account.

Let’s say you decide to use a 100 pip Stop Loss. That’s your risk. If the price goes against you, then you would be stopped out at 1.4500. So, you would lose $10 (100 pips x $0.10 per pip). That’s 1% of your account and is well within accepted money management guidelines.

Even if the price was at 2.0000, it would cost you $30 to trade one micro lot with a 50% maintenance margin requirement. Assuming a 100 pip Stop Loss on each trade, you would have to lose 98 trades in a row before you would no longer have enough money in your account to trade. Of course, it’s possible to do that, in theory. But, before you even get close to that many losses, you should stop trading and go back to the drawing board to figure out the problem.

Now, contrast this with 10:1 leverage. Using the same figures above:

It will cost you $146 to buy 1 micro lot (0.01 standard lot, or 1,000 units in Oanda). That’s 14.6% of your account. Assuming a 50% maintenance margin, your total cost would be $219, or 21.9% of your account.

If you still risk a 100 pip Stop Loss and the price goes against you, then you would still only lose $10 (1% of your account). The risk is the same, but the cost to enter the trade is now 10 times the cost.

Again, if the price was 2.0000, then if would cost you $300 to enter a trade with 50% maintenance margin. That means that you could only afford to lose 3 trades before you no longer had enough money in your account to trade.

Having said all that, keep in mind that Oanda’s maximum leverage is actually 50;1. I think you get the point, though, right?

So, going with Oanda at 50:1 and trading micro lots makes sense. Of course, if you want to trade mini lots, that’s a different story. In the end, it’s up to you. As long as you’re using good money management, you’ll be fine. Don’t get locked into the thinking that you need a huge account to trade.

Terry

5

Thanks for the great info!

For some reason i thought 100:1 was worse then 10:1 lol.

Yeah thats the reason i’m using oanda just because i don’t need to trade in lots therefore i can start off with 1k or less if i wanted to.

Been reveiwing and analysing the currency pair USD/CHF just trying to find trends and patterns, i think i will start trading in demo account by next week.

6

That’s the way to do it, slow and steady. Learn the basics first, demo to get a feel for the platform and your strategy, then a live account with small trades.

I’m always amazed how many people throw their money into a live account and start trading without any idea of what they’re doing. Then, when they lose their money, they blame the broker, or say that Forex can’t be done without a $10,000 account. :rolleyes:

All it really takes is for people to use their brains. Only an idiot would invest in something without understanding what they’re doing first. At least if someone is going to do such a dumb thing, don’t advertise your stupidity on a public forum by saying things like “this broker took my money” or “I’ve lost $5,000. How do I trade Forex?” :eek:

Terry

7

People obviously have way too much money or have been majorly misinformed, i think there is great potential to make money in this area, but i don’t think for a second it’s going to come easy.

I work bloody hard for my money i don’t fancy throwing it into the pond for the sharks to take away from me.

After backtracking i’m actually going to be trying the cowabunga trading scheme since i do like using ema’s and macd, they tend to see treads; maybe not before they happen, but there is deffently a slight action before a trend starts that i’m noticing the more i look.

So in Oanda i need to be trading something like 10k so that works out at $9.8 a pip but at 50:1 leverage this is costing me $0.2 per pip, am i working this out right? because i still haven’t got the gist yet on this leverage and payment since everyone else works in lots and oanda you just buy what you want.

8

Forget the leverage of the platform. Its the leverage of your account thats the issue. These are only the same if all your trading money is on your brokerage platform. If you are trading $10,000 and your risk is 2% ($200) with say a 20 pip stop you have $10 per pip. Do you see the platform leverage only dictates how much you must put down to cover the trade

9

Well made just over 500 pips last night assuming a pip is 0.001. At the moment i’ve made 5 trades 4 i’ve won but it’s always because i’ve taken profit rather then it hitting my “take profit” and the one i lost i didn’t get the trend wrong i just had my stop to close and i think the “noise” knocked me out.

So thats one weeks trading and almost 700pips = $700 from what would be a $1’000 account.

I’m assuming that this isn’t a normal week? lol