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Need help about how to manage money, account, in Forex

  • #1
  • First Post: Feb 5, 2015 8:38pm Feb 5, 2015 8:38pm
Hello To All

I have a very simple question for you experts, but for me it results very tuff to understand money management, I am a bit dump in mathematics. So for I need your guidance with practical examples may be in excel sheet in detailed, which could make my life easier to understand myself

For example: I want to open a live account with amount of 2000€ how could I maintain the account as a newbe during the learning period not losing too much. And keeping account balanced

Conditions: capital investment 2000€, if leverage is 1:200
1-how much max pairs I must trade
2-what lot size do I trade
3-what SL and TP I should set-up

I have only 3 question in my mind may be there are much more please help with this query to stay as long as possible in the market.

Thanks And Regards,
Moti
  • #2
  • Feb 5, 2015 9:08pm Feb 5, 2015 9:08pm
I don't consider myself an expert and not to be rude or harsh but I would stay on a demo acct until you have a few of these questions ironed out and you can consistently show a profit on demo, or if you must risk real coin use a minimum deposit not 2K. #1 I usually trade one pair at a time, even after 10 yrs, master of one is better than jack of many in my opinion, your mileage may differ. #2 micro lots at most with real coin, units would be even better for someone with little experience. #3 that depends on what works for your method that makes it a proven winning method, your risk comfort and a few other things. Hope it helps and good trading to you.
  • #3
  • Feb 5, 2015 9:34pm Feb 5, 2015 9:34pm
Hi Mothiram,

I think you are asking the wrong way.

Ask yourselves two questions : How much do you want to risk on a single trade (as a percentage of your capital), and how much on a total day (as a percentage of your capital).

For the sake of it, let us assume that you accept to risk 2% of your capital on a single trade, and you do not want to loose more than 6 % a day.

2% of 2000 USD is 40 USD.

you define the lots you may take according to where your stop loss has to be placed (let us say for a particular trade it has to be 60 pips). Each pip must cost you 40USD/60 pips = 0,66 USD. That means you have to trade 0,06 lots, and each pip means 60 cts loss/gain.

If your SL is hit you will loose 60 cts *60 pips = 36USD.

And if you hit your SL 3 times you will have 2% *3 = 6% losses, you are at your max possible losses, you have to stop trading fotr that day
  • #4
  • Feb 5, 2015 9:52pm Feb 5, 2015 9:52pm
I agree with both the posts if you are still trying to figure out you MM style then by all means you are probably not ready to go live.

A simple system that has worked for me and that I have shared with many is this.

1) trade .05 to .10 for every thousand dollars that you have in an account.
2) set your max loss on any trade at 50 pips ( most pairs only move 100 a day which helps you stay out of the chop and gives room for a retracement. if you do this using the above recommendation you can be wrong 20 times in a row before blowing out your account.
3) set a realistic goal. using the above setting and getting just 20 pips a day and compounding your 1000.00 investment can be worth 13 million in just a year.

Just food for thought.

patience equals profit
  • #5
  • Feb 5, 2015 11:14pm Feb 5, 2015 11:14pm
maybe you wanna try this, Motiram...
do the sequence that stefcio2002 said
you'll be just fine
Attached File(s)
File Type: xls MM Calculator.xls   51 KB | 633 downloads
i worshipped... Momentum
  • #6
  • Feb 6, 2015 6:12am Feb 6, 2015 6:12am
Quoting js5020
I don't consider myself an expert and not to be rude or harsh but I would stay on a demo acct until you have a few of these questions ironed out and you can consistently show a profit on demo, or if you must risk real coin use a minimum deposit not 2K. #1 I usually trade one pair at a time, even after 10 yrs, master of one is better than jack of many in my opinion, your mileage may differ. #2 micro lots at most with real coin, units would be even better for someone with little experience. #3 that depends on what works for your method that makes...


Quoting calstar
I agree with both the posts if you are still trying to figure out you MM style then by all means you are probably not ready to go live. A simple system that has worked for me and that I have shared with many is this. 1) trade .05 to .10 for every thousand dollars that you have in an account. 2) set your max loss on any trade at 50 pips ( most pairs only move 100 a day which helps you stay out of the chop and gives room for a retracement. if you do this using the above recommendation you can be wrong 20 times in a row before blowing out your account....


Quoting RockRobb
maybe you wanna try this, Motiram... do the sequence that stefcio2002 said you'll be just fine
Quoting RockRobb
{file}

My Hartley thanks to all of you js5020, stefcio2002 and RockRobb for your time and help

I am agree with all of you want to say in resume that not to be greedy and be in discipline to be in profit long run that encourage me more.

Special thanks to RockRobb making a excel sheet which is challenging to me, thank you for making my life easer to understand I want is it possible to you make a change currency in € (EURO)

Thanks to you all of you for your kind help

Regards,
Moti
  • #7
  • Feb 6, 2015 6:41am Feb 6, 2015 6:41am
Quoting Motiram
Hello To All I have a very simple question for you experts, but for me it results very tuff to understand money management, I am a bit dump in mathematics. So for I need your guidance with practical examples may be in excel sheet in detailed, which could make my life easier to understand myself For example: I want to open a live account with amount of 2000€ how could I maintain the account as a newbe during the learning period not losing too much. And keeping account balanced Conditions: capital investment 2000€, if leverage is 1:200 1-how much...
Open an account with OANDA (not my best friends)...but you will be free to trade without fixed lots.
You can trade in units.
Start risking very very little, say: 1 Euro.
Your risk is called R.
R= the distance to your stop, it doesn΄t matter if you trade dayly or 5 minutes...
Oanda has a pip profit calculator, so you can adjust your amount invested (risk to stop) to match your 1 Euro Risk.
Meaning, if you get stopped out, you will loose on that trade, excatly 1 Euro or less...if you trail your stop later.

After 10, 30,50 trades...calculate (excell), how many Rs you lost or gained, divide by the amount of trades, and you get your EXPECTANCY, which is what you can expect to gain (or loose), per 1 Euro risked...
Eg.: an expectancy of 0,5, would mean your system is expected to produce 50 cents per trade, on average...
If you make money, increase your risk after 10,30,100 trades..to maybe 1% of your account.
1 Euro sounds minimal, but if you double your R, capital every month, you could be a millionaire in just a couple of years...which hardly anybody does though...
If you start risking lots or mini lots right from the beginning, like most , you will blow the account in less than 6 months...

Hope it helps...
  • #8
  • Feb 6, 2015 9:13am Feb 6, 2015 9:13am
Quoting cuchuflito
{quote} Open an account with OANDA (not my best friends)...but you will be free to trade without fixed lots. 1 Euro sounds minimal, but if you double your R, capital every month, you could be a millionaire in just a couple of years...which hardly anybody does though... If you start risking lots or mini lots right from the beginning, like most , you will blow the account in less than 6 months... Hope it helps...
Cuchuflito, I will keep in mind when I will open live account but I checked and OANDA does not use cTrader. I think you are right to stay tuned longer in the market it is necessary to keep increasing the account either gaining even 1 cent or multiplying constantly and losing a part of gained if possible. So far I need to make a plan of the Risk and Reward ration before entering in Forex.

As someone said penny is saved and penny is earned. I am not a good money manager, Forex is like other businesses in which you can earn or fail but only caution required it is open 5 days 24 hours so it needs strict discipline. In either situations being a loss or a gain of a certain amount or % a day and away from the computer till next day or find best trade hours and fix timing can benefit to grow the account constantly. It is just my thought. Feel free to guide me and suggest me your ways and experience.

I like the suggestion of Stefcio2002, but I am thinking on how to plan it in the paper and make it work in action?

Thanks and Regards,
Moti
  • #9
  • Feb 6, 2015 9:25am Feb 6, 2015 9:25am
Quoting Motiram
Hello To All I have a very simple question for you experts, but for me it results very tuff to understand money management, I am a bit dump in mathematics. So for I need your guidance with practical examples may be in excel sheet in detailed, which could make my life easier to understand myself For example: I want to open a live account with amount of 2000€ how could I maintain the account as a newbe during the learning period not losing too much. And keeping account balanced Conditions: capital investment 2000€, if leverage is 1:200 1-how much...
Stay in demo trading until ...
  • #10
  • Feb 6, 2015 3:12pm Feb 6, 2015 3:12pm
I would recommend trading with a demo account and hone your skills until you could make consistent profit. While using demo account, treat it like your real account and try to get familiar with price action on any particular pair that you're interested. Find out your risk tolerance, trading style, and come up with a solid trading plan. Then and only then should you open live account. With the current volatility in the market, 2k would not give you enough cushion to trade successfully. I would recommend at least 5k to go live!
  • #11
  • Feb 7, 2015 12:42am Feb 7, 2015 12:42am
most people who trasfred from stock market like me into forex market do not understand the diffrance between the markets

the trik in forex market is (leverage x lot size x SL x TP x number of open trades) it may take from you years of testing until you reach a day that you understand each one of them

so as thay said

learn
test on demo

until you see your self master in this game
  • #12
  • Feb 7, 2015 8:17am Feb 7, 2015 8:17am
Quoting Motiram
Hello To All I have a very simple question for you experts, but for me it results very tuff to understand money management, I am a bit dump in mathematics. So for I need your guidance with practical examples may be in excel sheet in detailed, which could make my life easier to understand myself For example: I want to open a live account with amount of 2000€ how could I maintain the account as a newbe during the learning period not losing too much. And keeping account balanced Conditions: capital investment 2000€, if leverage is 1:200 1-how much...
Start with defining why you'd be wrong. (Please don't use previous high/lows to define this, or any other technical. I would go with a breakdown in macro flows/fundamentals and also inter-market correlations).
That definition must be based on HOW the markets trade in reality.
If your definition of an 'out' doesn't align with reality, ie. how the market actually trades, then you'll never get that little plane of yours off the ground.

Second, as the kind folks here have shown, you can then do the math.

Just because you've done your calculations and defined risk, doesn't mean you'll be profitable.

I am not familiar with how you trade and your knowledge, i make no assumptions here. Having said that, this was posted in the rookie section.
But i warn that, you must first know what you're doing and understand how the markets work.
If you haven't a clue, then you can run a tonne of numbers and it'll be a waste of your time. You won't be able to stop the inevitable, you'll just prolong it.

All the best.
Regards
  • #13
  • Feb 7, 2015 8:19am Feb 7, 2015 8:19am
Quoting phongvu12
I would recommend at least 5k to go live!

Quoting hamedmohd
it may take from you years of testing until you reach a day that you understand each one of them so as thay said learn test on demo until you see your self master in this game

I will keep in my mind yours suggestion.

Thanks to both of you for your help

Regards,
Moti
  • #14
  • Feb 7, 2015 8:38am Feb 7, 2015 8:38am
My advices:

Start trading 0.1 lots.
Trade only one pair at time.
Use a biggest SL compared to TP, the SL and TP play an important role in what will be your success or failure.

Simply put, the biggest your Risk/Reward ratio, the biggest the probability of profits will be.

Example, a 10pips TP with a 100pips SL will give you 90% probability of your TP to being hitten (profit) instead of your SL.

Most people like the idea of trade the opposite way, like 100pips TP and 10pips SL (one winning trade would cover 10 losing ones), however you would have 90% probability of being Stoplossed.
In other words, you would need to make an extremely good entry/trade in order to win.

Now, making extremely good entries is not simple, you would need a tremendous knowledge of markets and a good amount of luck too.
On the other side, if you trade with a bigger SL and a smaller TP, you would need to make an extremely wrong entry/trade in order to be stopped out! (like buying at the top of a big range, or trading against a strong trend).
And of course, such extremely wrong trade would cost you big.

So my advice is make practice with real money (demo is just a waste of time), small lotsizes, and bigger SLs compared to TPs.

You should be fine.
  • #15
  • Feb 7, 2015 8:39am Feb 7, 2015 8:39am
Quoting stefcio2002
Hi Mothiram, I think you are asking the wrong way. Ask yourselves two questions : How much do you want to risk on a single trade (as a percentage of your capital), and how much on a total day (as a percentage of your capital). For the sake of it, let us assume that you accept to risk 2% of your capital on a single trade, and you do not want to loose more than 6 % a day. 2% of 2000 USD is 40 USD. you define the lots you may take according to where your stop loss has to be placed (let us say for a particular trade it has to be 60 pips). Each pip must...
stefcio2002, I have read your post again and again and now find my self very easy how to workout cost of each pip and work out lot to trade according to take a risk on balance money

Now my question how to add spread in the risk % in buy and sell and I think it vary also according to lot size I want to request you could you make a excel sheet and how does leverage work

Or may you have any idea does exist any EA that manage the trade risk for example I have balance 2000€ if I input risk 2% SL 20 TP 30 and EA place the lots order calculating risk amount 40€ and place the SL according to it, and next order risk should count on Equity may be it is my thought….

Thank you, your help has been great for me to understand easily


Regards,
Moti
  • #16
  • Edited 9:12am Feb 7, 2015 9:01am | Edited 9:12am
Quoting tunera
My advices, small lotsizes, and bigger SLs compared to TPs. You should be fine.

Thank you tunera, I am agree with you small lot sizes, and bigger SLs compared to TPs may some trade close in the profit, but for example I have balance money 1000 I trade 0.10 lot and place SL100 and TP 20 My R:R will Be 5:1 as I am a newbe may I place all order and may hit 5 trade continuously in loss so far I will be left with 500 only which will pull me out from the market quickly so far I find MM is very necessary this way I will gain or loss little but I will stay long time in the market and keep learning on my losing trade with backup account to place new once…..

Regards,
Moti
  • #17
  • Feb 8, 2015 7:04am Feb 8, 2015 7:04am
Quoting Motiram
{quote} stefcio2002, I have read your post again and again and now find my self very easy how to workout cost of each pip and work out lot to trade according to take a risk on balance money Now my question how to add spread in the risk % in buy and sell and I think it vary also according to lot size I want to request you could you make a excel sheet and how does leverage work Or may you have any idea does exist any EA that manage the trade risk for example I have balance 2000€ if I input risk 2% SL 20 TP 30 and EA place the lots order calculating...
Hi Motiram. I take spread into account by knowing where my TP is and adding 5 /6 pips to it. Then I calculate the number of lots I may take and it make up for spreads. I do not think there is an EA for that.
  • #18
  • Feb 8, 2015 8:44am Feb 8, 2015 8:44am
Quoting stefcio2002
{quote} Hi Motiram. I take spread into account by knowing where my TP is and adding 5 /6 pips to it. Then I calculate the number of lots I may take and it make up for spreads. I do not think there is an EA for that.
Thank you stefcio2002 for answer just now I found risk table under this link
http://forums.babypips.com/newbie-is...alculator.html
Please I want you to test and tell me does it is calculating correctly everything we need or give me your opinion one of my friend is excel expert can help to improve it as per require.

Regards,
Moti
Attached File(s)
File Type: xls risk table.xls   34 KB | 347 downloads
  • #19
  • Feb 8, 2015 10:01pm Feb 8, 2015 10:01pm
It s ok, except one point : you need to take into account your tradinc account base currency?

an equity of 2000 USD is not the same that an equity of 2000 JPY. and 40Usd is not the same as 40 JPY when it comes to risking 2%.

therfore 1 pip ina 2 lots trade on EUR/GBP has not the same value in %age if your account is lin USD, in EUR, JPY or AUSD.

I suppose this calculation is made for USD base account. But if your account is not labelled in USD you will have to adjust.
  • #20
  • Feb 9, 2015 2:17am Feb 9, 2015 2:17am
Quoting Motiram
Hello To All I have a very simple question for you experts, but for me it results very tuff to understand money management, I am a bit dump in mathematics. So for I need your guidance with practical examples may be in excel sheet in detailed, which could make my life easier to understand myself For example: I want to open a live account with amount of 2000€ how could I maintain the account as a newbe during the learning period not losing too much. And keeping account balanced Conditions: capital investment 2000€, if leverage is 1:200 1-how much...
Hi Motiram,

1) Number of pairs you choose to trade depends on your trading plan. For a trend follower, they trade all markets. Compare that with a day trader who only choose to focus on a few pairs.

2) With regards to lot size, i find it is better to know how much you are risking per trade, how wide is your stops and only then decide how much size to put on for your trade. More information regarding position sizing can be found here.

3) With regards to SL and TP , this depends on your trading plan once again. One way you can go about placing your stops is based on ATR. You can check out this video for further explanation.

Let me know if that helps!

fartist
Whether you can or you can't, you are both right.
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