Need help! Newbie questions...

blueshift,

1. I am definately like you in this regard.

2. I can figure this out.

3. I am prepared.

4. This is great advice.

5. Consistency...GOT IT!

Your post was positive. I appreciate this very much. I have to say I expect most of the members to assume the worst in me especially since I am female and only 26 and they have proven to do so so far. But it doesn't feel like you are that narrow minded which is refreshing.

Thanks!!!

Okay, I'll comply by responding to your PM's here.

This is good! A degree of toughness, mostly mental, is needed to be successful in forex trading. The best attitude you can have is a solid, anchored belief that you can learn to do this; that you WILL learn to do this whatever it takes, and that NOTHING will ever make you give up or stop believing in yourself. You're off to a great start if this is your attitude, and I sense that it is.


Yes, that explains the 12% gain. The amount of $1000 is fine, but not for a mini account. For this tiny amount of money you need a micro account or smaller. Here's the difference, and I'll have to cheat by giving you the answer to one of the questions I asked.

A mini account has a nominal lot size of 10,000 units. A micro account has a nominal lot size of 1,000 units. Brokers offer leverages of 50:1, 100:1, 200:1 and 400:1. These represent the maximum theoretical leverage you could use on a trade. However, it would be imprudent to trade at such ridiculously high levels of leverage, because trading high leverage is one of the primary reasons beginners fail at trading.

Since we don't want to use the broker's leverage, what traders use instead is called true leverage and is calculated by dividing your position size by your account size. In your case you traded one mini lot on a $1000 account. So true leverage = 10,000 / $1000 = 10.

A true leverage of 10 is far too high for a beginning trader as it will cause wild swings in their equity which will trigger wild emotional responses which in turn lead to over trading and revenge trading. Ultimate result is a blown account. My average true leverage is about 2.5. Pushing it to 5 makes me nervous, and 10 flat scares the hell out of me!

Other traders can trade higher leverages successfully, but that's them and fits their personality. It's not me and doesn't fit me. But regardless of your ultimate trader personality, you should start small until you learn to trade with consistency.

Now, in contrast, if you had a micro account and you traded a single micro lot, your true leverage would be 1000 / $1000 = 1. This is a very safe, if unexciting, leverage to trade at.

Okay let's take the 112 pips you are down on cable (GBP/USD) and compare the two effects given that you told me you traded only one mini lot.

MINI: 100*(1- ($1000 - $112)/$1000) = 11.2%

MICRO: 100*(1-($1000 - $11.20/$1000) = 1.12%

To recover the MINI account back up to $1000 will require a gain of 12.61%

But to recover the MICRO account back up to $1000 will only require a gain of 1.13%.

Notice in each case that the percentage gain needed to return to break even is larger than the percentage lost. The deeper the drawdown, the larger the ratio between the percent lost and the percent needed to recover. For example, if you lost 10%, you would only need about 11% to recover, but if you lost 50% you would need 100% to recover. This is why it is very important to limit drawdowns on your account. The deeper in the hole you go, it becomes exponentially harder to recover.

Another reason to trade a micro over a mini is a thing called asymmetrical leverage. There's an excellent article about it in the beginner's forum in the money management sticky that I recommend you read. In short, if you have less than $30000 in your account, by trading micro lots instead of mini lots, you will actually make more money over a given set of trades.


Because of the simple reason that the trade might not return to that price for months, or even years! Why keep your margin tied up that long? Free up the margin for use in other trades! Dump the loser and get on with finding better trades.

That's a great attitude!

LOL! Actually, they would, and I do. After you've been around the Factory for a while, you will find that that saying is used frequently to gently and caringly chide new traders into realizing they are doing something that will hurt them. It is almost always kindly intended and is an example of the tough love I mentioned earlier.

I have never understood why women want to be equal to men. Why would a woman want to bring herself down to that level? hehe

You wanted it hard? Okay, here it is. I've got two balls. You've got two ovaries. 2=2. I have one brain, you have one brain. 1=1. Hmmmm... Sounds like equality to me. Okay that is settled. Could you do me a favor and not bring the female vs male thing up again? Thanks!



Of course I assume the positive in you. I wouldn't invest my time in you by posting at such length if I didn't think you had positive in you.

Take care

Dial

When I am blunt with new traders, my posts are deleted, and I have an "attitude". When Dial is blunt with new traders, they thank him. Maybe I should just stop posting altogether; it would definitely save me some time, seeing as I never help anyone to begin with.

I thanked you. LOL... and when I talked about attitude I was not refering to you.

just keep your trade until you have your margin called !

i love that !

pay some money to have a big lesson , no one can teach you this lesson ,try to taste it by yourself

dont need to listen anyone else !

Twinch;

I beleive your heart is in the correct place. I think Dial knows that also. It's not your content, it's your delivery. I have the same problem at times both orally and in print. I think it comes from being a person with a lot to accomplish (goal oriented). But also a level of skill that I have not obtained yet but strive for. Look at all of Dial's posts. They are allways laid out in a logical format with a beginning middle and end. Like reading a good tech book.

Good trading this week.

Your post is outstanding! Thank you very much for your time.

As far as being treated equally to men hahaha that was funny. The only way I want to be treated equally is for the guys to realize there are women out there who think logically and can weed out emotion, who can drive good, and who don't want you to go easy on them at raquetball! haha!

PS: I'm using FXsol with 1k & 100:1 leverage.

Phew! I am bad at this too! I come off hard and blunt. I like to be short and to the point. I am striving to improve especially towards my employees.

Why learn from your own mistakes, when you can learn from others' ? :

well...you can't really avoid losses. but you can avoid making mistakes others have made.

are you telling me that your system is 100% accurate?

well then.... I guess we all will be reading about you in the forbes list of top billionaires next year.

HOPE has no place in trading!

l lol...I'm sory but that sounds so wrong.

kindness??? You claim to know exactly how I trade. And then you indicate that I'm inferior to you, because I can't avoid losses and you can...??? The fact that you claim to know how to avoid losses tells a lot about your experience in trading. Have you ever even traded? And don't try to make yourself look smart by posting rules of this forum. I've already read those, and I STICK to them unlike yourself.

Ha ha ha, too. Sorry, no offense, but i agree. Good luck in your next trading to you, christina.

GBP/USD was back up to 1.9125 ........ Therefore, Christina must have closed her position. It's like washing your car..... it won't rain until you wash it.