Am I undercapitalised?

[PipMuncher]

Hi all,

Reading the following on 'babypips.com' has got me worried:

"No matter what the forex brokers tell you, don’t ever open a “standard account” with just $2,000 or a “mini account” with $250. The number one reason new traders fail is not because they suck, but because they are undercapitalized from the start and don’t understand how leverage really works.

Don’t set yourself up to fail.

We recommend that you have at least have $100,000 of trading capital before opening a “standard account”, $10,000 for a “mini account”, or $1,000 for a “micro account”.

So if you only have $60,000, open a “mini account. If you only have $8,000, open a “micro” account. If you only have $250, open a “demo account” and stick with it until you come up with the additional $750, then open a “micro account”. "

Now, I'm still at the demo trading stage myself, and expect to be here for some time. Currently, I'm trading a $5k demo account with ACM, and am profitable using standard (100k) lot sizes.

My plan was to, as and when I'm ready, open a mini account with maybe $500 - to get into the mind set if trading with real money, and eventually to go for a standard account with maybe $10-15k capital.

I'd be trading intraday, one (100k) lot at a time, risking not generally any more than 25 pips EUR/USD - generally around a 1:1 risk reward ratio. So, on $10k capital for example, would not be risking more than 2.5% at any one point in time.

Does this seem like a risky strategy?

 

[bangkoker]

Did you not ask this on another thread a day or so ago? or someone else did.

Anyway I think a lot of people on here agreed you can open an account with $500 as long as you trade small and build up then why not.

I have gone from £200 to £1500 by slowly building, i think the big thing is not to think, 'oh well it's only $20 on this trade so it doesn't really matter'.

Anyway papertrade and when you are ready to start, be sensible and...

Good luck :clover:

 

[PipMuncher]

Did you not ask this on another thread a day or so ago? or someone else did.

Anyway I think a lot of people on here agreed you can open an account with $500 as long as you trade small and build up then why not.

I have gone from £200 to £1500 by slowly building, i think the big thing is not to think, 'oh well it's only $20 on this trade so it doesn't really matter'.

Anyway papertrade and when you are ready to start, be sensible and...

Good luck :clover:

Thanks bangkroker - and congrats on your sucsess. $200-$1500 may be a small amount of cash but a 750% return is no mean feat! What kinda time period was this over?

Yea - I found the other thread a few hours after starting this one. My question, however, is not if it is possible to start trading with $X $Y OR $Z - but rather if my plan to be trading standard lot sizes in the above senario with $10-15k capital seems like a viable strategy...

 

[fayalac]

You are undercapitalized when the size of your minimum order exceeds 1% of your equity.
So if you have a 100 usd account and you can make a 1 usd order you are not undercapitalized, you are simply taking more risks than you should because in case it goes against you you will not have the chance to recover with other pairs or start a recovering procedure to get your money back.

 

[Shakone]

Yes you are undercapitalised. You should be aiming to risk 2% or less per trade. That isn't going to be possible with standard (100k) lots and an account of £500. At £5k then it might be doable. Get a mini or micro account.

 

[pappi]

Aren't we all?

 

[bangkoker]

Aren't we all?

Exactly,
My personal view was I could afford to risk £200, I've bought into poker games with the same amount but in reality as the money grows 1% or less is ideal

 

[4xpipcounter]

Pipmuncher, the question should be what % do you want to margin. If you say 5%, then you need a minimum $200 on a micro account. 10% means the minimum you need is $100, etc.
Stay away from the stereotypes that internet ding bats want to dump on you. You decide what is best.
The only time you are undercaptialized if you when you do not have enough money in your account to match your margin preferences. Always stay within your margining criteria. Never veer from it.
Also, if your methodology has not proven to be a consistent winner, than please stay out! Get your methodology together before you venture out. You could have 1/10% on 10,000. If your methodology is losing, you will dwindle away all your money. If it is a winner, then you can start at $100 and you will watch it grow.
Baybpips assumes you are going to get in and lose. That is why they tell you you can not open even a micro account with $1,000. It really bugs me that these sites who do not really know the people they are talking to want to fill their heads with a bunch of stereo typical talking points.
They were right when they told you to open a demo account 1st, and let it grow. If you can't trade a demo account, then I promise you can't trade your live money. There is the mental part of trading that really kicks in when you hit the Big Leagues.

Hi all,

Reading the following on 'babypips.com' has got me worried:

"No matter what the forex brokers tell you, don’t ever open a “standard account” with just $2,000 or a “mini account” with $250. The number one reason new traders fail is not because they suck, but because they are undercapitalized from the start and don’t understand how leverage really works.

Don’t set yourself up to fail.

We recommend that you have at least have $100,000 of trading capital before opening a “standard account”, $10,000 for a “mini account”, or $1,000 for a “micro account”.

So if you only have $60,000, open a “mini account. If you only have $8,000, open a “micro” account. If you only have $250, open a “demo account” and stick with it until you come up with the additional $750, then open a “micro account”. "

Now, I'm still at the demo trading stage myself, and expect to be here for some time. Currently, I'm trading a $5k demo account with ACM, and am profitable using standard (100k) lot sizes.

My plan was to, as and when I'm ready, open a mini account with maybe $500 - to get into the mind set if trading with real money, and eventually to go for a standard account with maybe $10-15k capital.

I'd be trading intraday, one (100k) lot at a time, risking not generally any more than 25 pips EUR/USD - generally around a 1:1 risk reward ratio. So, on $10k capital for example, would not be risking more than 2.5% at any one point in time.

Does this seem like a risky strategy?

 

[4xpipcounter]

No.

Aren't we all?

 

[JDTRADER]

You can deposit less than $500 on some sites and still be within Money Management

No more than 2% of your account balance per trade

I don't think of the money, I think of pips.

Get the pips and the Balance looks after itself.

Demo trading is great to learn a platform but it don't give you that emotion factor.
When it pips up or down, for you or against you. You'll know its YOUR MONEY and pulling the trigger comes into factor.

From my reckless past if you want to trade live, trade small but on a site where your not under capitalized. Don't worry if is pennys its the pips your after plus you'll know if your ready to deposit loads.

Everyone wants to jump in trading £1 a pip but most are not ready for the emotion of trades winning £100 or losing £100.

Good trading whatever you decide, with trading you have to do what works for YOU.

 

[Dubai]

You can deposit less than $500 on some sites and still be within Money Management

No more than 2% of your account balance per trade

I don't think of the money, I think of pips.

Get the pips and the Balance looks after itself.

Demo trading is great to learn a platform but it don't give you that emotion factor.
When it pips up or down, for you or against you. You'll know its YOUR MONEY and pulling the trigger comes into factor.

From my reckless past if you want to trade live, trade small but on a site where your not under capitalized. Don't worry if is pennys its the pips your after plus you'll know if your ready to deposit loads.

Everyone wants to jump in trading £1 a pip but most are not ready for the emotion of trades winning £100 or losing £100.

Good trading whatever you decide, with trading you have to do what works for YOU.

Pips are the last thing I think of. % growth is all I'm concerned with.

Someone could be making 1,000 pips a month and someone else could be earning 200 a month and that person could be making bigger % growth by simple risk position.

I think too many beginners focus on bringing in as many pips as possible.

 

[JDTRADER]

I think too many beginners focus on bringing in as many pips as possible.

its all about the pips for me, pips = £

% well £1,000 add 2% £1,200. £50,000 add 2% £51,000

Depends on your balance and needs from trading I think. I'm starting low so for me I score pips I grow my balance.

Once again and like I always say everyone is individual and do what works for you as a trader, newbie or seasoned pro.

Remember everyone starts out as a newbie