I found some nice articles that recommend a 2% max position size as a position sizing rule of thumb. So I'm thinking wth $6k, $120 will be a position size corresponding ~2%, with 5 mini-lots that's a ~25 pip stop. If I choose a second position, will subtract $120 from $6k, and repeat the position size calculation with $5.88k. Will try to keep total at-risk capital size down to less than three of these, for less than 6% at any one time. Seems like I should be more conservative than this even. My first strategy with the money management, is simply to follow a nice clean trend. No clue about anything else but I figure this is a good first start. Will scour the posts here. I realize my newbie ways might be entertaining, especially to CableTrader. Now I understand how a typical sucker must feel at the $5/$10 blinds no limit hold'em I usually play. I haven't reached a combined total of 20 hours of trading generally, forex specifically, nor studying trading, so hopefully I can learn on the fly.
this is a really important step you just took, and exactly what I was suggesting. It took me years and two blown up accounts to realize how important this was. Bravo. If your strategy works with a 25 pip stop, great. If you need more room, reduce size.
Im curious why you think its the wrong answer to risk 100 bucks on a 6k account? Its like 1.5% and he will, at very least, stay in the game for a while. I think 50 ticks might be too much on EURUSD though. You can be proved decisively wrong intraday on the euro with a tighter stop and improve your risk reward, was this what you were getting at?
The 1.5% wasn't the problem, it was the arbitrary 50 pip stops. Mr Meow, the cat with nine lives (or nine ET aliases ) Sorry, I can't take the OP seriously, he's likely just another weekend triggger clone!
Thanks everyone, I hope I don't blow my account either. Upon further thinking, it seems that I have to think of things more in the following order: 1. position size: as a more general and strategic objective - of course the even larger scale strategy would be to look at such things as characteristics of a specific currency pair, how the general news looks like, macroeconomics, etc. 2. then worry about the secondary and more specific and tactical details in order to achieve that general strategic objective such as: a. number of pips for the stop b. the number of mini-lots second - all as as a function of market volatility, exact time of day (overlap of certain markets, how close to open/close of markets, etc.), how the trend is looking like, etc. ------------------------------------ CableTrader, the reason the arbitrary 50 pip was arbitrary is because I have no freakin' clue. Repeat: I don't have a clue and I don't claim to have a clue since I am a complete newbie at forex (just like the title suggests) and I have never traded in anything period, I couldn't open an account with Interactive Brokers since I put down "0" trades in all the categories. Furthermore, my slightly more refined, though admittedly still amateurish and coarse-grained follow-up with the percentage-based stop is hopefully another baby step. Also, if you want, have the moderator verify that I'm posting from a completely new IP address that doesn't match any previous username.