lower your lot size, and raise your pip amount.. trust me. I lost a good chunk of my account in 1 trade. And then worked my way up slowly. It is ALOT easier to win when you arn't worrying about loosing half of your account, or your weeks profits in a single trade.
Here is the answer to the meaning of life, as far as FX goes: Listen close... From any given price you can effectively assume that the next 20-40 pips are random. "How can you make such an audacious statement?", people are no doubt now asking. Consider the sheer size of the market, as well as the number of monster players. XYZ fund comes in and deals in 250MM Euro (not an extremely chunky amount), a few more funds follow behind, pushes the market up 15 pips, and everything is 20 pips lower a few minutes later when these buyers are gone. This happens all day, every day! So, when a large fund or bank prop desk takes a position, 90% of the time their stops are at least 20-40 pips away. And so, this is why most everyone who trades FX on a retail basis loses. Can a $2000 levered account survive a 30 pip drawdown? Or, think about it this way: when you have to pay a 3 or 4 pip spread, how can you expect to make 5 pips consistently? This whole FX retail nonsense is one of the the worst things to happen to the markets. At least in equities limits to leverage give you a fighting chance to make it with a small stake. I'm sure there will be people that will reply saying that they turned $2k into $1MM. I won't respond to anyone other than to say: 1. I don't believe you. 2. But, in any given distribution there exist outliers. There the many less outliers in FX than in equities (where there are few as well) for the reasons given above. Good luck.
Very good post. I would say a $20K is the minimum needed for a realistic trading method. If want to do this full time for a living you need much more than even that.
I disagree, making a consistant 5-10, or 20 pips a day is not as hard as everybody makes it out to be. SO LONG as you LIMIT your losses. BUT... If you over leverage yourself, you won't be limiting your losses. Just keep that in mind. Hell you could probablly make money without stops and just putting in one trade for the day. If you did your research and tried to judge if the day will be an up or down day you would probablly get it right more times than wrong. There are plenty of ways to trade, and to win. But just make sure you limit your losses. The losses hurt way more then a win will ever heal.
Actually, it can be done. Except for spread betting I think the only accounts that can be succesfully traded with only a few thousand are forex accounts. In the case of a 30 pip drawdown why would that be a problem? With oanda you could enter a $1000 position. 40 pips on that is $4. It still leaves your account with $1996 - $1995 (depending on spread). The fact that most forex traders lose is because they haven't got a clue about trading and are all following the latest gurus recommended indicator. That and overleverage. If new traders keep tiny $2000 accounts and keep learning then they have a chance. They blow out 3 or 4 small accounts while they learn about position sizing, vendor scams, money management. But no major harm is done. Eventually they may find an edge. Then they can increase account size.
Or with a $2000 mini-account at FXCM only trade $10,000 lots. A 30 pip loss (spread included) is only $30.00 (EUR/USD).
Exactly, with a 2K account the max I would trade is 1-3 mini lots. Personally I would scale in if I were you. and have a max of 3 lots scaled in at the end.
Get a demo account and and try to make money off that consistently... if you can do this you might have a chance in the real market. Then save up about 10k and trade mini lots like people are saying. If you can do this for a year or more then go for it... just don't become a statistic! ask yourself do I want to do this for the long haul or would i be better going to the casino and putting it all on black?
if you have the right "edge" and do not "blow up" the acct and are willing to grind it out during any hours that provide you that edge ... you might be able to make 6 figures from this small acct ... providing there is good volatility or the edge continues to be enough after slippage and or commissions ( if applicable ) ( note ... this can apply to any type of instrument in any year that you have a defined edge ) ( note ... there is no guarantee that you will continue to do as well in the future being that : A: the edge might be gone then B: you might "blow up the acct" with too much size than your methodology or yourself can handle :eek:
JUST because they give you the extra leverage factor, nobody is putting a gun to your head and forcing the trader to overextend a good MM plan.