Leverage and Deposit amount required

[sheeru]

Hey guys

After reading babypips, It clearly stated that opening accounts with less than £10000 is just like throwing your money away. It says that opening a acc with £250 is just stupid.

Well having just come out of uni i was hoping to open a acc with around £500 but after reading that i dont see the point of even reading and trying to learn about forex if u can only do it with large amounts of money.

Does anyone feel that they even opening a acc with a small amount is a profitable investment or is it a waste of time? Has anyone done well after opening a small acc?

 

[shakespeare515]

It is not a waste of time sheeru, in fact, It is a necessary step. If you can't grow a $500 account, then why try to grow a $10,000 account. The mistake most new traders make iis they open too large before they are consistent. You really must start on demo, then once you have a workable strategy that you have becom consistent on, just trade minis, until you can gain consistency at that level of risk, then gradually increase your lot sizes as you get comfortable at each new risk level. Don't think you are going to open an account with any amount of money and be successful if you don't go through the process.

...good trades,

Sam

 

[Rhody Trader]

Whoever said that on BP was wrong because given the micro trading options available out there, it is no problem to start small. That said, you have to also have small expectations in terms of nominal returns. Many new small traders fall into the trap of taking way too much risk because they think to themselves "It's only £X. I don't mind losing it."

 

[bangkoker]

Whoever said that on BP was wrong because given the micro trading options available out there, it is no problem to start small. That said, you have to also have small expectations in terms of nominal returns. Many new small traders fall into the trap of taking way too much risk because they think to themselves "It's only £X. I don't mind losing it."

What Rhody says makes a lot of sense, I could do with a post-it note to remind me.. it doesn't matter if 10p,£1 or £10 a point, the fact remains it is x% of fund and in order to make consistent returns need to ignore the overall cost in £ and think in % terms, money preservation and return rates to grow to bigger account and ultimately become long-term profitable. Not sure if makes sense but does to me. thanks for the reminder.

 

[sheeru]

Thanks for the replies-I am very conscious of the fact you have to start small and develop in terms of skills before you can progress into becoming a profitable trader. Buy just reading what it said on the babypips tutorial had put me off because i dont have alot of money to invest and it said it was a waste to effort starting small-i just wanted to know what others thought.

 

[Black Swan]

Hey guys

After reading babypips, It clearly stated that opening accounts with less than £10000 is just like throwing your money away. It says that opening a acc with £250 is just stupid.

Well having just come out of uni i was hoping to open a acc with around £500 but after reading that i dont see the point of even reading and trying to learn about forex if u can only do it with large amounts of money.

Does anyone feel that they even opening a acc with a small amount is a profitable investment or is it a waste of time? Has anyone done well after opening a small acc?

What prat told you that? Start off micro and as a few of the guys have stated you should attach the same discipline to trading micro as you would standard, in fact you should attach the same discipline trading demo as you would real..

You can go a long way with your first $500 dollar/£500 micro account with Alpari, fxcm etc...and you can hopefully relax into the learning process whilst you learn the job..

Folk also state only trade with money you can afford to lose, I agree, however you should trade the small money as if it really really matters, not life and death, but with the utmost respect; respect for you, the profession, and the market...

Oh and I posted this up earlier, guys who turned 500 dollars into 5,000 last month in fxcm's comp..

http://forexforums.dailyfx.com/king-micro-trading-contest/

 

[PipMuncher]

Funny but i actually just started a thread on the same subject!!!

Sheeru I think you need to re-read the baby pips article though:

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”.

They are not saying opening with less than 10k is a waste of time - they are saying that trading standard lots with a 10k account is over-leveraged...

 

[jiggly]

Thanks for the replies-I am very conscious of the fact you have to start small and develop in terms of skills before you can progress into becoming a profitable trader. Buy just reading what it said on the babypips tutorial had put me off because i dont have alot of money to invest and it said it was a waste to effort starting small-i just wanted to know what others thought.

you dont necessarily have to believe everything you read.

starting with $500 is as good amount as any in my opinion, there is a solution for every trader now days.

find a broker that allows you to trade micro lots, since you are starting with less capital you need the flexibility in your trading to mainting a good risk profile.

trading mini lots will quickly lead t disaster.