eToro – Forex Trading Forum

[Tropezienne]

I am still trading on the demo account - and have fallen into the habit of always selecting 100 dollars as the amount to trade. I’m not sure how I got into this habit - and I need to think about how to determine the size of my investment in a trade before I begin to trade with real money.

I did a bit of research today and it seems that experienced traders use a percentage of their capital. That seemed simple. But what level of percentage? The debates range from 1% to 10%, most people seem to think 3% or lower is best in order to protect your trading capital.

Then I read : "if risking 1%-3% of your trading capital means you can't afford to buy 1 lot or contract of whatever market you want to trade in, then you are under-capitalised".

Has anybody started trading forex with a ridiculously small amount and succeeded in building something out of it?

Julie the Newbie

http://who-gives-a-forex.blogspot.com/

[emartonline]

I have but through MT4 platform I invested $62 two weeks ago. I am now on $75 using Strong trend advisor from forexautopilot. see deatails on the product at http://emartonlin.forexrobot.hop.clicbank.net

[Tropezienne]

Hello emartonline - welcome to the etoro forum. It’s great to see that you are earning - but a 13 dollar profit in 2 weeks kind of supports the view that to be undercapitalised means that a decent profit cannot be made. Also the forex auto pilot costs 79 dollars which is more than your starting capital….

From what little I have learned about forext trading I tend towards not buying systems that promise to do the work for me - I suspect that they are making money on their sales whilst I am spending money on their products. Also, it is important to actually learn about forex.

After a little more research I find that to risk 2% of the trading margin per position on accounts of over 1000 dollars is about right. For mini accounts of 300 dollars a risk of 5% of the margin seems to be more acceptable. Although it seems to me that to risk this amount and to lose would soon wipe out the account.

I’’m still feeling very unclear about this issue.

Keep us informed about how the auto pilot performs for you .

Julie the Newbie

http://who-gives-a-forex.blogspot.com/

[emartonline]

That is why I had to diversify. You are right I was wiped off 110 on my fiirst trade on e-toro. I guess money management plays an important role besides large deposits

[Tropezienne]

I’m still somewhat confused about how much I should place on a trade. It dosent help that I am only trading on the demo at the moment and I always place 100USD. But I’m beginning to think about the future - when I trade for real. I need to know how much real money I should be able to risk (ie: losing it would not cause hardship or financial problems).

I even read somewhere that it is stupid to start real trading with less than 10k USD …..

Previous figures that I found ranged between using 1% to 10% of one’s trading capital. Then I read the following in eToro’s’Basic Forex Trading Guide’ :-

You should only risk a small percentage of your total account balance on each trade. This simply minimizes your risk, so that even if you end up losing your entire investment on a trade, it doesn’t have a critical effect on your account balance. The recommended amount is 25% of your account balance per trade. More aggressive traders go as high as %50, but never higher than that. It is a very important rule to keep, since the lower your account balance drops, the harder it is to rebuild it.

This is a really confusing issue. Any advice?


Julie the Newbie

http://who-gives-a-forex.blogspot.com/

[Tropezienne]

This issue of what amount of capital is needed to start trading keeps popping up - it has created a discussion on my blog (which is aimed at novice traders) and we really need the advice of somebody more experienced.

I was posed this interesting question over the weekend :

I've been thinking, but I might be wrong, what if you use an important part of your total account, but you put a loss limit at one or two percent of the amount? Then you could have great benefit without risking a lot.

I thought that this was a great question - it made me think. Sometimes I see a flaw in the questioner’s logic, then the next second it makes perfect sense to me. However - I’m sure that the flaw is there.

Is there a flaw ?

Is it that, by using this technique you would not lose a lot, but would lose more fréquently? That the positions might close too soon and you’d lose a potentially good trade? Is it a technique for Day Trading or Swing Trading or longer term trading?

Julie

http://who-gives-a-forex.blogspot.com/

[niconois]

Hello I am the one that talked with you on your (very) nice blog.

I have been thinking about it, maybe it is worth doing it for people who have a big margin, over 10k, and who trade on very short term periods.

For my first week (demo) I have earned $196. I was bad at the beginning but got better at the end.

What works better for me (at the moment, I need to try it out several weeks before saying it is good) is to trade with amounts of $200 and a leverage of 1:50. So that my loss limit can be lower than if I used a leverage of 1:100 or 1:200. I trade this way on periods from 12 hours to 36 hours maxi.

At the beginning I tried day trading on a very short period (less than 2 hours) and it didn't work good.

But I need to practice several month before being able to say what is good or not.

[Tropezienne]

Hi Niconois - thank you for visiting my blog - I’m glad that you enjoy it.

I think that you are right about the question you asked on Who Gives a Forex? and the premise that posed (see quotation in two posts up on this thread).

If somebody has capital of 10k plus it could work on day trades perhaps. Which kind of answers the question that started this thread - ie: a decent amount of capital is needed to start serious trading.

Although you have made a good start - 196 dollars in a week is good. I would be happy with that. It is also useful to count the pips that you make because your pip gains or losses ease out differentials between currencies and the spread taken by the broker. So pips are a clearer measure of your trading results.

See my ‘Pips Diary’ thread for more information about pips.

And - if you are a French speaker - why not take a hop over to the French forum here on eToro, we need more members there.

Julie

http://who-gives-a-forex.blogspot.com/