Are micro and mini lots really worth it?

i have been demo trading for about 2 years now and im getting pretty good.(20% in the last week) now i was wondering, Should i save my money and wait to get a 5,000 dollar account or should i just start a 500 dollar account and grow the account. Is there money to be made in Micro or mini lots?

Depends on your draw down. Please don't tell me you started a demo with a $100,000 dollar account and now want to start a live account with $500 though. It really depends.

If you can keep your draw down to a minimum so you don't get margined out...and continue to grow your account....starting with $500 is possible. However, not recommended by most. It's possible though...no matter what the so called "gurus" tell you. I've met a few guys that started with $500 or $1000 and continue to grow at 1 to 2% per day.

Lucky? Perhaps. Oh, and please don't tell me you're using an EA.

So...it all depends. Don't start window shopping just yet though.

I would suggest starting with a $1000 or less even if you have a lot more. $500 is enough if you trade micro lots or less. You can grow the account. The experience of trading live is another learning step. If you have consistent gains for a while you can always deposit more money to the account. Avoid the temptation to trade mini lots if you have a small balance.

I am going to give my honest advice here: You are not ready to trade live.

For some perspective:

$5,000 starting balance.
10% (a conservative number based on above) gain a week.
$710,214 your balance after a year with "only" 10% gains.
Just a little under 6.6 Million with 20%.
Do you actually expect this to happen in real life? If you can do this, be careful of what broker you use, because some of them you could bankrupt in 18 months.

While I am certainly not trying to tell you that being a successful trader can't be done, I believe you are expecting too much. In order to get 20% return last week, you leveraged way too high. I do not need to know the details to see that. Also, with real money, emotion will creep into the game. It's one thing to be down 4% on a demo, it's another thing on a live trade.

This tells me that you did not treat the demo the same as a real account. That is a recipe for disaster.

However, it appears that you at least have two major things working for you:

You obviously are patient, to demo for two years.....this screams you are probably willing to do what it takes.

You must at least understand something about Forex, to be up like that.

However, I would say that your first live trade will be a huge eye-opening experience. If you are leveraged really high, it could be a disaster. Worse, yet, it could work out, reinforcing this dangerous style of trading.

Please, please, please learn Money Management. I cannot tell you how much this changes things. And also, use it on demo a little while longer.

And yes, if you want to keep your risk a fixed percentage, you need micro-lots. How else are you going to go long $12,500 USD against the EUR for example, unless you have the micro-lots.
If you refuse to listen to me about this, at least listen to the advice of starting out with a small account first, just to get your "feet wet". Please.

Clockwork

from what I read you need to learn a lot about MM

but just as a straight answer in mini acc your USD 500 and 1:100 would give you 50 lot

if you plan to use 2% per trade thus you can play 0.01 lot per trade

now you need to apply your trading strategy, what is your target per trade?

as for my strat I'm aiming 90 - 130 pips per day per 0.01 lot thus even at around 0.08 USD per trade I might win $7.2 per day or 1.4% daily

depends on how confidence you are with your strategy (which should be quite high assuming you have been around for 2 yrs) you can always increase the position per trade to 5 - 10 % but IMO don't go above 20%, my best advice maximum is 15%, just remember that the higher your position is the more winning percentage you need

as a rule of thumb if you want to trade above 5% per trade you need winning percentage of above 80%

btw, at 5% you would still make some money, in my case if I were to choose 5% I would earn around 3.5% per day that's I think is more than what one can earn from a regular US saving account per annum

Firstly, you need to identify what type of learner you are. That is, Adult Learning for those who don't understand that statement.

In a nutshell, there are two types of learners, practical and theoretical.

Practical learners don't fully understand until they actually do it or put it into practice. They can do the theory until their heads burst, but not fully "get it" until they actually practice it.

Theoretical learners can read about it and then practice it without any problems what-so-ever.

If you're a practical learner, jump in as soon as you can with an amount you can afford to lose. Demo trade until you understand how to place trades and you have a system that you completely understand. I suggest support/resistance because it's easy and I have a good mate who is a professional trader from a major bank here in Australia (ANZ) who told me that support/resistance is the primary technique they use. This person also trades for himself and he lives in Noosa on a waterfront home worth over 5 mill. So to me, he's the real deal...

If you're a theoretical learner, read what I have to say first before jumping in with your life savings...

Forex is a practical business and no amount of theory can prepare you for what this game will reveal. Why?

Firstly, you can read a lifetime of theory and still not know it all.

Secondly and most importantly, forex is practical because EMOTION cannot be experienced until you actually feel it. I don't care who you are, how much you know, how much you have read or how much you can make demo trading pretending it's real. You can't simulate REAL human emotion.

Demo trading certainly helps to learn the ropes, but the true emotions do not surface until you trade live.

I'm a theoretical learner myself (honours and masters in software engineering), but forex is one game that I can't fully understand by reading books and demo trading. I have learnt 10,000 times more by trading live, with real money, with real emotion.

I suggest you go with a broker like OANDA, who allows you to trade 1 unit (0.00001 of a lot) and start with an amount you can afford to lose. This is usually $500 or less for most people.

And yes clockwork is right, get your money management down-pact and you'll be fine.

Leverage all you want, just stick to a 1 or 2% loss risk ratio.

First let me say, I am not a professional trader. I am trying to become a professional trader, but I am still learning.

•Anyone who tells you that you need more then $300 to start trading and trading efficiently is full of shit.
•Anyone who tells you that you will be under capitalized is full of shit.
•Anyone who tells you to start your first live account with more then $500 is full of shit.
•If you honestly think you will make 10-20% a week consistently, you are full of shit.
•If you think you can trade without proper money management, you are going to be broke very soon.


Now, first and foremost; if you have been paper trading for 2 years and STILL do not have a grasp of money management, I would recommend a couple things. One, take the time to learn money management and apply it diligently to your paper account for several months first. Two, when you open an account, do it with the smallest amount possible (If using a broker like IBFX it is $250).

Secondly, the ONLY thing you should focus on is percent’s. The percent gain you have at the end of a month (Not week or day), the percent of your account you are risking per trade, the percent of trades you have that go your way, and the percent of time you honestly spend evaluating your mistakes. The ONLY thing pips are good for is determining your stop. Without knowing your stop you can not apply proper money management.

Third, the reason to start your account as small as possible is to learn from the real thing. You may be thinking now that when you lose 1-2% of $300 its only $3 - $6 and that’s no big deal. Every person I know that has started with even the smallest amount has come to me and mentioned the shock of the feeling when they lost that $3 - $6. I am an engineer and work with engineers, so to be honest $3 - $6 is usually less then we spend on lunch every day. But losing that money and realizing that its real, and then doing mental calculations and going wow 2% of a 30,000 account would have been $600 in a blink of an eye. It is honestly an eye opening experience when you lose money for the first time in the forex market, no matter how small it is. You need to “build up your tolerance” I guess you can say. The fact is, you will have losing trades in forex, and the stress (Trading Psychology #1 thing in trading) of losing money can force you to chase money and trades. You need to learn how to trade and how to accept the downturns with a small amount of money before you do it with a large amount.

Lastly, you are not under capitalized. All of the major forex brokers allow you to trade .01 mini lots at a time. With this level of granularity, you can always make a trade well within a 1% per trade money management schema. Yes if you are trying to make a living off of your $250 investment, you are way under capitalized. But this should not be the goal of your first live account. This account should be treated with respect and as an education. If you make $5 on a $250 account you have made 2%. There is no difference in doing that and making $500 on a $25,000 account. The only difference is the amount you have made, not the percent. And as I stated above, this should be your focus. When you are comfortable with this account and have consistently made a profit for 3 months in a row, you can then add more to the account. Even at this time, you should only add a marginal amount to get use to losing the extra money when you have bad trades. Keep doing this until you have an account that is making more money in a month then you can afford to deposit. If forex is a race, it is not a sprint, it is a marathon. Take your time (Just as an example) if you had $1000 and made 5% a month you would have $1,125,276.03 in 13 years. In August I will have been married for 13 years, I assure you it goes fast and that is an incredible gain in 13 years. My point is, do not try an achieve 10-20% a week. Set your sights for something like 3% a month and work towards that even if the account has $250 in it.

This is an absolutely brilliant post. However, I would clear just one part up: You are under capitalized. What I mean by that is that you have to be aware of percentages, and resist the temptation of trying to make $500 turn into a gold mine overnight. Can it be done? Of course, but it's going to take time. Relax, let it come to you.

With $500 as an example, you need at least a 20% return daily, just to make $500 a week to live on. And that's everyday.

A lot of traders get into trouble because they don't feel like they are advancing "fast enough" with these small numbers. However, yes.....you can trade as little as a penny a pip, and efficiently.

Great post though....seriously should be a sticky.

There is always a debate here on FF and elsewhere in the trading world about what percent of traders fail - 80%, 85%, 90%, 95%. Pick your number and that is the number that fail to be realistic.

Of course it is possible to start a trading account with $500 and trade it higher but if one wants to leverage their account into something greater (no, not a zillion dollars) just something sustainable and maybe a monthly income then additional funds would need to be added over time - not to mention having steady, reliable performance.

There are certain "rules' in trading that cannot be avoided and one is it takes money to make money, no matter how many other knuckleheads might tell you different. That doesn't mean you cannot start small and add, just don't expect to start small and on trading alone become king of the world.

well to make a living definatly not, to hedge with other accounts if something "freezes", or to scalp, learn, they work just fine...and honestly i like them, since they dont charge commision, since some brokers charge anything below 1 lot, 12usdx2 comisions, if u are a position trader, or a scalper over the long run,....

%20 a week is not a measure ! It is up to you to open "big" account and make "big" money or start with small and to increase it. But my advise will be to open small account first, if results of your trade will be good you can open big account anytime.

That is it in a nut shell in my opinion and basically how i am approaching my trading. I started small with $500.00 and traded 3 months before i added any additional funds to it. Basically i wanted to see if i could survive the first 3 months first.

Now i can say playing with $500 bucks was entertaining and a great way to learn. After surviving the first 3 months (i doubled the account), i now add funds every month to slowly bring the balance up(~1k a month), then just add an additional mini lot to my trades.