anyone need help?

Essentially, you should use the minimum size that your broker offers. In the case of 400:1 leverage it would be 0.01. This way your account will last a long time, by the end of which you'll understand Money Management better and be able to adjust your risk better.
This is why we say that you should demo first so that you can sort all these problems out without risking real money.
Understanding the differences, such as they are, between leverage and margin is vital to your growth.
Just pick a broker that lets you trade nano lots (in my case InterbankFX ) and go from there. The more you read the more you'll understand, but doing it will make it all clear to you.

Hi Qwert

There are lots of ways of looking at leverage and risk. I like to keep things simple, so I think about them separately.

Risk is the percentage of your account that you're willing to lose on a trade. Let's say you have a $10,000 account (for a $500 account, see my comments below). If you trade 0.5 lots of GBPUSD, every 1 pip movement will affect your account by $5. So if you set your stoploss 40 pips away from entry, then the risk is 40 x $5 = $200, which is 2% of your $10,000 account. Viewed this way, none of this has anything to do with leverage. Risk is the product of position size (0.5 lots in this example) and stoploss point (40 pips from entry).

Leverage determines the amount of money you need in your account ("margin") to be able to take the trade. Let's say that GBPUSD is currently priced at $1.90, and your broker is offering you 100:1 leverage. Then the margin you need is 0.5 lots x $100,000 per lot / 100 leverage x 1.90 = $950, which is 9.5% of your $10,000. If the leverage was only 50:1, then the amount required would be 0.5 x 100,000 / 50 x 1.90 = $1,900, or 19%, i.e. at 50:1 you need twice the margin, compared to 100:1, and so on. So at 50:1 you are "tying up" 19% of your account balance, leaving the remaining 81% free ("unused or available margin") to place on other trades. None of this alters the fact that the risk is 2%, i.e. if your stoploss gets hit, you lose $200.

A "standard" account allows a minimum position size of 1 lot; a mini account 0.1 lots; a micro account 0.01 lots.
So, assuming a minimum size trade on GBPUSD, in a standard account, each pip move alters your account balance by $10; in a mini account, $1; in a micro account 10 cents.

As a general rule, you shouldn't place more than 1%-2% at risk on any one trade. That will allow your account to survive many losses. Preserving capital will keep you in the game. Of course if you're a newbie, you should start trading in demo, to practise your understanding of the above, and get a feel for the mechanics of trading.

To answer your question re a $500 mini account: 2% (risk per trade) of $500 is $10. So given that each pip is worth $1, the maximum distance your stoploss can be away from entry is 10 pips. Obviously this gives very little room to move. Hence with only $500, it would be better to trade in micro-lots. I've read elsewhere that to trade a standard account (at 2% risk per trade) ideally requires a minimum deposit of $25,000; hence a mini would require $2,500; a micro $250. At 2% risk each of these allows a stoploss 50 pips from entry.

I've heard it said that many brokers tempt newcomers with $500 accounts and high leverage. The end result is that, to give their trades some room to move, the traders are forced to set their stoplosses a reasonable distance from entry, and thus risk much more than 2% on each trade. Even the most experienced traders can suffer a run that includes 5, or even 10, losses. That's why starting undercapitalized is one major reason why newbies end up blowing their accounts.

Another point regarding undercapitalization: having to keep stoploss close to entry forces you to trade very short timeframes (e.g. "scalping"), where price movement is arguably more random in its nature, and the spread cost is greater relative to the price move, making the initial barrier even greater. For example, if you're trading 200 pip moves, a 5 pip spread (2.5% of the move) is more easily "absorbed", but if you're trading only a 20 pip move, then 5 pips is 25%, an extremely significant barrier.

Sorry, I've digressed a little, but I hope I've answered your questions.

Best wishes
David

After Hanover's reply even I get it now
I'm going to have to quote that post in my thread somewhere, Hanover. Nice work

Hanover - Thank you very much. I think I got it right now.

PeterFm - I'll follow your suggestion by demoing first using different lots and leverage. Thanks again.

Hanover--very well said.

I have been demoing since the start of April of 2007 with a starting capital of 10,000. The broker has a fixed leverage of 100:1 and the smallest lot you can trade is 1 lot. The company's spread was 6 pips on all currencies, GBP, Euro, E/J, Yen, CHF & AUD. These are the only currencies they offered. They have a commission of US$70 on every trade so it was very difficult to win but still I managed to bring it to 37,000+ (mostly trading E/J from April to mid July) but it went down to 22,000+ this end of August. Of course trading demo is much easier bec. no money is involved. Longest win streak was 11 and longest losing streak was 4 but the losses were huge bec. I didn't put any stop loss. Another is that I could have minimize losses if I can trade smaller lots( i.e. .1 lot) especially when I can see that the trend is not as strong. I learned a lot from Forex factory and most strategies I used were from contributors here at FF.

I was thinking sometimes that I was just lucky. That is why I want to start with a small account. Also, I cannot afford to lose a 10,000 account.

I have seen many brokers with lower spreads and have no commissions compared to the broker I'm using(demo). Imagine with this broker, you will have a -$130 upon the opening of a 1 lot trade. Also, positive swaps were only "buy" for Yen, E/J & CHF.

Can anyone recommend a MT4 platform broker that accepts US$500 opening account, have high leverage like 400:1 or 500:1 and wherein you can trade in small lots like .1 lot? Of course with lower spread and definitely no commissions.

Hanover - I followed your advice today by using demo(another broker which allows 500:1 leverage and .1 lot) and I definitely got it. Thanks. I don't know if this is a good broker(North Finance).

I've started playing around with MetaTrader 4 but just cannot download any indicators or templates into the MetaTrader Editor. Is there some trick to this I'm not seeing? Unfortunately, some of the other forums just give generic instructions like, "Copy the template you just downloaded into the directory." I tried dragging the template icon into the template directory, but that didn't work either.

Thanks in advance,
Marcy

The one thing most folk miss on this one is to close MT4 and then restart. If the file you've downloaded is in the correct location, it will now be available.
If you're doing this, and still have a problem, come back to us and we'll deal with each file in irs own right.

I have a question about time...

So far I have only demo traded, and I can place my trades whenever.
I work full time, and live in California, so I get home around 5, and sometimes will trade around 8pm, which is 11pm NY time.

Now - what has confused me, is the fact that people complain about working full time jobs and being unable to trade when they get home because their market has closed, or they live in Australia.

This would lead me to believe, that when you trade live, your broker is only open during one market time frame, and then the broker closes and you are unable to place orders.
So if I took a US East Coast time zone broker, I would probably only be able to trade until 10pm Eastern time zone, OR 7pm where I live.

Is this the correct understanding?

Should I choose a broker that is open when I will most likely have time to trade or am I limited to US brokers since that is where I live?

No this isn't correct. Most retail brokers are open 24/5. Of course there are always exceptions to anything. This isn't something you are ever going to have to worry about.

This concern seems mostly to come up when folk are playing specific sessions, or have seen a thread based on methods such as break of daily candles etc.
Generally the problem appears to be that different brokers have slightly different starting points for daily candles, or their feed shows a different candle formation (due to price variations), so folk get thrown off by this.
I'm sure Mike, as I do, plays his brokers charts as he sees them. A variation here, a variation there, means nothing in the long run. It'll all come out in the wash.
Pick a broker that suits you, and who's platform you're comfortable with and learn to trade.
Enjoy

thanks guys - I was hoping that would be the response.

But; all the "but this trading session is closed when I get home" just worried me.

I only trade off daily and weekly, or 1 min \ 5sec so I doubt it ever matters.

I'm John--not the better half of the "John&Vera" team. So much for introductions. I noticed on other threads that the use of a Demo Trading Station fashioned after a Mini Account was avialable. Is this through FXCM?
I'd like to make a smooth crossover when SOMEDAY we start consistantly making a profit. The good news is that although I just, as in today, have become a active forum member I have been reading yall's ( I from the South)
posts and have actually taken some great advice like refusing to trade on our real mini account until we get beyond the hit and miss beginners phase.
Is there such thing as a Demo Mini Trading Station?

Thanks

John

But you would be better starting with a micro, or nano, lot account.
Money Management is easier at these lower levels, due to the ability to place much more precise lot sizes.

Are these in Demo mode and/or are they real and are they avialable through FXCM?

thanks for the fast response.

Im reading the prior posts and alot of my question are geting answered to some degree.

Thanks again
John

Only to some degree? All the brokers (I'm speaking for MT4 ones - but most are the same) will give you unlimited time to demo.

You may need to renew, or start, an account every 30 days. This is unfortunate as you lose your previous history, but you can save it as an HTML file to look at past progress.

FWIW, I use InterbankFX who go as low as 0.01 on their accounts. Good to learn on in demo, and good to learn on if you MUST trade live, at some point in the future, with low risk.

Hello maite,

I have FXCM as my current live broker with its Trade station as the platform. I have become rather comfortable with MT4 now with all its indicators and stuff... I would like to know which is a good broker with small spreads which I can use on MT4 and who can let me have a standard account and ability to open microlots?

Any tips would be greatly appreciated

Thanks!
-A.

Peterfm,
Thank you for all the answers. You are right on the ball when some one has a question. That is so cool. All this talk about MT4 brokers, I have a question. I look at my charts when I wake up before work and when I get home after work before bed. I can't seem to find a broker that opens a daily bar at the times I get up or get home. If any one knows of a broker that does, could you please post them here? Any where from 11AM EST-2PM EST. And 3AM EST-5AM EST. I would really appreciate it.

Quote:
Originally Posted by Marcy http://forexfactory.com/images/buttons/viewpost.gif
I've started playing around with MetaTrader 4 but just cannot download any indicators or templates into the MetaTrader Editor. Is there some trick to this I'm not seeing? Unfortunately, some of the other forums just give generic instructions like, "Copy the template you just downloaded into the directory." I tried dragging the template icon into the template directory, but that didn't work either.

Thanks in advance,
Marcy

The one thing most folk miss on this one is to close MT4 and then restart. If the file you've downloaded is in the correct location, it will now be available.
If you're doing this, and still have a problem, come back to us and we'll deal with each file in irs own right.





Here is what happens. I open MetaEditor, then go to File, and click open, and the file box appears with my downloaded file. Then I click on the file and open it, and I've been trying to "save as" c:\ProgramFiles\MetaTrader - Alpari\Directory\Template\{INSERT FILE NAME] But no matter what I put in that File Name box, I get the following message: "Path does not exist. Please verify the correct path was given.

Thanks in advance,
Marcy