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We discuss here forex trading and managed accountsHelmut Renner (6)    Helmut Renner    http://www.forexheli.com What Is the Perfect % of Total Equity Should I Use Per Trade?Posted Thursday, September 17, 2009 (68 days 23 hours ago.) Viewed 12 times. A ot of traders have no clue how to use proper trading sizes per trade especially when they are trading live markets. That is the exact point of mistakes done by most of the traders. These cause them loosing money in Forex. We have to know proper money management & trading plans. Every trading strategy must be taken into consideration of the maximum percentage of total trading capital that risk should be taken on any one single trade. They shouldn't risk too much money on any given any single trade which is very essential for a trader. The following rules are very important in order to survive financially in Forex trading. Your trading size should not be grater as 1/10th of your account size. For instance, If your account size is 10.000 Dollar than your trading size can be 1 Lot, (or 10 Dollar per Pip) On an 1000 Dollar account your trading size should not exceeded 0,1 Lot (or 1 dollar per Pip). On an 100 Dollar account your trading size should not exceeded 0,01 Lot (or 0,1 dollar per Pip). To keep these things into simplest form, I repeat: 1 Lot buying/selling are 100.000 Units of a currency. Pip value = 10 Dollar 0,1 Lot buying/selling are 10.000 Units of a currency. Pip value = 1 Dollar 0,01 Lot buying/selling are 1.000 Units of a currency. Pip value = 0,1 Dollar With an account size of 100 dollar and you trade with pip value of 1 dollar, only 100 pips are needed and your account is empty. You lost all!. As you can see to adjust the trading size to your account size is very essential. But why they are doing this? Here is a psychological effect on trading. First they trade with lower as 1/1000 of account size. Than some losses occurred. Account size melt down to 70%. At this level people changed there risk and trade with 1/300 ( that mean trade size is 3 times now bigger as before) and they loss again. After account size is 50%, suddenly the risk grows exponential, and they trade with 1/100 or less from account size. Let us see this as an example now with numbers. Suppose we have an account size of 1000 dollar. As I said above, we should not trade more than 1/1000 account size, that's 1 dollar /pip. (0,1 Lot). If we loose 300 dollar and have now an account size of 700 dollar. (70%). At this point we start to trade with 1/300 of account size.2,33 Dollar/pip (300 pip lost and we blow our account). We trade it & and make loss 200 dollar. Account size is now 500 dollar. Now we expanded the risk and trade with 1/100, that's 5 dollar/pip. Now we can't loss more as 100 pips, because at this level our account is going to be empty. On a 50% account size the chances of losses are so strong for most traders and they will now attempts to recover the lost money with 1 or 2 trades. That's the reason why they blown up their accounts. I will not call this greediness, its only fear of loss. These traders can't accept losses anymore psychologically. If they really want to survive, they must have to work on proper trading strategy and modify it again! If it's proved, than start trading with very small sizes and tries to win more trades. After winning a bunch of trades they would increase trading size easily. Some stuffs to be remembered essentially: To recover a lost from 50% we need to double our account size. Clear? If we start with 3000 dollar account size and we lost 50% (1500 dollar) Our account size is now 1500 dollar. We need the same amount of money which we lost. So we must earn 1500 dollar from trading to reach our trading account size from 3000 dollar. Can I able to make you a clear picture what do I mean? If we don't loose 50% of the account and start with 3K and double our account so we had 6K, but with the same amount of work! 
Permalink Comments (0) Holy Grail - Does it really mean anything on Currency Trading?Posted Thursday, September 10, 2009 (75 days 6 hours ago.) Viewed 8 times. It seems that 99% of Currency traders today have some misconception that they can gather a pair of indicators together and make millions overnight. Or they spend years visiting web sites, reading books, and attending seminars and courses, believing that if they can find the holy grail, they will instantly become profitable and be able to make a fantastic living as a trader. Its for sure those who try to implement it may not be successful due to their lack of knowledge of this dynamic market. Anybody who implies it's possible is not a real trader. Trading forums cause of this mind diversion of any new trader. Most of inexperienced traders come here and discuss about holy grail or so which has not any existence in reality indeed. Lots of discussion about holy grail & other useless stuffs mostly misguide many new traders in this Forex world. Instead of spending years searching for the holy grail, new traders should spend their time watching markets and learning how the various aspects of market dynamics interact with each other. It takes intricate knowledge of the market to construct a method that will succeed over time. In order to do this, you of course must have appropriate capital and sound money management. Once all of that is in place, you must have the discipline to execute without variance. Our brain is our vital asset. We have the ability to think in a different aspects of life which separates us from other living creatures on this earth. Similarly it separates us from computers. A computer can only do a job as per instruction, but a human can think various way as per conditions. A computer can blindly follow an instruction but a human mind is only thing who can actually produce real trading results! Instead of trusting any indicator blindly, you can use it as a guide. But remember all indicators does not work at same market conditions! It's only your brain which can be used better than as any indicators which indicates better on your trading ideas excepting any trading tools. As long as you know how to use them and how to combine them together, you will be profitable no doubt. If you want to make money in live, you need a proper education in Forex basics + skill development and more and more practice! And if you keep efforts behind your success plus if you have a proper desire to achieve your goal, you can make a lot of money. So get a proper forex education and you'll be rewarded for your efforts. -------- Helmut Renner is a highly experienced Forex full time trader, with over 10 years specializing in Currency Analisis. He is action-oriented and one of the few rare talents that are uniquely qualified to help traders understand the process of successful trading. Want to learn more about how to trade forex for profit online? http://www.forexheli.com
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