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kricka
Jan 01 2016 at 17:06
92 postów
The leverage chosen when signing up for a live account is of concern especially for new traders. kierans suggestion on 1:100 is a good start. This will prevent taking too high of a risk on the trading account itself. However to be able to have good money management on every position higher leverage then 1:100 might be needed, if the funded account is under $1000.

kmartyn suggestion of 1% total risk of the account at any given time is highly recommended. This means that if the trader have several positions in place at the same time the risk per positions has to be lowered. A good strategy is to have a low risk like 0.33% per position and max 3 positions in the market opened at the same time, which will amount to 1% total risk of the account. Trading with this kind of strategy of course requires discipline to not place more then 3 positions max. Most often the trader will only have one position used up and risking 0.33% before exiting. The average on the whole when it comes to the account risk might end up around 0.50-0.60%. Sure, it will not give a lot of profit but the draw down will be in control as well.

Trading news is as many have pointed out not a good idea for new traders. The slippage and spread can be high and the total risk can then go way beyond the 1%.

" Lock in the profit and minimize the draw down "
janettte
Jan 05 2016 at 09:16
30 postów
In regards of leverage, isn't it the case that it is completly the same if you trade on 1:100, 1:400 or something else if you use a predefined % max. Risk per trade (the only thing that changes is the used margin).

vic84
Jan 11 2016 at 08:16
17 postów
mlawson71 posted:
Try to avoid trading during high-impact news, learn from your mistakes and don't open new positions because you're bored or you don't have the patience to wait for a good entry point. It took me a while to learn these simple truths.


Yeah news have a very initial impact on the market and if you make any mistake in predicting the influence of news on the market, then it could be a very big loss.

mlawson71
Jan 11 2016 at 13:03
1487 postów
Tell me about it. My personal rule is that if I'm not sure what the effect of the news will be, I don't trade them. And more often than not I'm not sure what the effect of the news will be.

kieran (snapdragon1970)
Jan 11 2016 at 15:25
1943 postów
No one really knows what the news will be until its released apart from a few people,you can prepare for it though.Trade up to the news or 10-15 mins after,of course there is another option of a straddle trade,but you need to be experienced at doing this,I have done this many times successfully,you can get caught though if your not careful,it depends on what your trading and the Data type.
I had a straddle on NFP on Friday past,which went well,you can check my post.

"They mistook leverage with genius".
kricka
Jan 12 2016 at 03:17
92 postów
janettte,
the problem is when it comes to too high of leverage, like 1:500, is if an inexperienced trader do not have position protection or account protection the whole account can be wiped out very quickly if he's caught up on the wrong side of the market.
That is why it's so important to have a stop loss on every position and also on the whole account it self. I don't actually see high leverage as negative in trading but new traders do not grasp this until they have experience how important it is to be fully protected.
Also there is a concern with gaps, overnight positions and weekend positions for new traders. Just one mistake can actually wipe out the whole account if the leverage is too high. Low leverage is like a stop loss from the broker and better start with low leverage to prevent mistakes like forgetting stop losses and account protection.

" Lock in the profit and minimize the draw down "
janettte
Jan 12 2016 at 13:23
30 postów
kricka posted:
Low leverage is like a stop loss from the broker and better start with low leverage to prevent mistakes like forgetting stop losses and account protection.


Interesting point. Totally agree with you (so far i never thought about this).

Jake Summers (JakeSummers)
Jan 12 2016 at 13:25
7 postów
Makes no odds with using 1:50 or 1:500 leverage providing you use proper risk and money management.

2% is still 2%, whether it's yours or not.

He who risks nothing, risks everything.
kieran (snapdragon1970)
Jan 12 2016 at 13:52
1943 postów
kricka posted:
janettte,
the problem is when it comes to too high of leverage, like 1:500, is if an inexperienced trader do not have position protection or account protection the whole account can be wiped out very quickly if he's caught up on the wrong side of the market.
That is why it's so important to have a stop loss on every position and also on the whole account it self. I don't actually see high leverage as negative in trading but new traders do not grasp this until they have experience how important it is to be fully protected.
Also there is a concern with gaps, overnight positions and weekend positions for new traders. Just one mistake can actually wipe out the whole account if the leverage is too high. Low leverage is like a stop loss from the broker and better start with low leverage to prevent mistakes like forgetting stop losses and account protection.


There is the option of a guaranteed stop loss.

"They mistook leverage with genius".
Ben Nathan (BenNathanFX)
Jan 12 2016 at 14:45
137 postów
Good post - I would make a few suggested edits though (in my opinion)

1. Over leveraged. I know the appeal of trading 1:500 or even 1:1000, but DON'T do it. You will blow you account. My max now is 1:100 and that carries a significant amount of risk. - GOOD :) Leverage = Bad

2. Money management. Do not risk more than 1% of your account. Some say 2% is fine, but 1% is better. set your stop losses at 2% of capital. - Its more about risking what you don't mind losing.

3. Worry about entries less and focus on how you're going to exit the trade that makes the most sense. Once you're in the market manage that position. Worry more about the REASON for entry - what has caused price to be where it is - is there a fundamental reason for it - is that reason likely to change.


HOLY GRAIL: Fundamental Analysis to chose your pairs/direction, Technical Entry/SL/TP for consistent Management of those decisions
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