Jump to content

Newbie here Question about Risk Management.


Recommended Posts

Hey Guys,

Every book or course that I read talks about position sizing, that you should not bet more that 1% or 2% per trade. Now here comes my question lets say I'm planning to start out with a 1000$ account. 1% of that would be 10$ is this possible on the IG platform? If yes please show me how.

Thanks in advance for your time!

Link to comment
14 hours ago, Lorinius said:

Hey Guys,

Every book or course that I read talks about position sizing, that you should not bet more that 1% or 2% per trade. Now here comes my question lets say I'm planning to start out with a 1000$ account. 1% of that would be 10$ is this possible on the IG platform? If yes please show me how.

Thanks in advance for your time!

Hi, good question. the answer is yes but no, new traders should use the absolute minimum trade size the broker will allow, with experience of not losing then think to step up to 1 or 2%. The risk on any trade is the amount of your stop loss, if  you are looking to trade on a higher time frame chart and the min trade size is £0.50 and your stop needs to be 20 points then fine but any bigger and then no. A 20 $/£ max stop loss really limits you to day trading which is not really for a novice, the H4 or daily chart is better but tends to need larger stops.

The first and hardest lesson in trading is to learn how not to lose money, after that everything else is relatively simple.

If you are learning then seriously consider using the IG MT4 platform where min trade size is just £0.10 (in UK) so then if you need a 50 point stop for higher time frame charts that's fine, mt4 doesn't have as many markets as the IG web based platform but you can learn to how trade on any market.

Link to comment

Thank you all for your insightful replies. Just a little more about myself firstly. I started trading at the top of the Bitcoin bullmarket 2017/18 where needless to say with all the bull action in alt coins it gave me an unrealistic expectation of trading, 200 euros turned int 5k in a matter of weeks with little to no research on the assets. Then the bearmarket started, the profits started to trickle down, still trading like a pile of garbage now that I look back on those days. Then my biggest mistake..I took 5k$ on a loan to trade some more and needless to say all of that money went away in a short period of time. Still paying on that until 2022. Upon further research, every analyst and pro trader tells it the same, that the worst time to get into trading is during bullmarkets...lucky me!

This all really left a bad taste in my mouth but I'm determined to become a better trader, with 100$ I started trading my way up to about 500 now, starting to see progress, getting more composed about my emotions and am currently looking to develop a system. That brings me to you guys, in that, that I'm looking to trade much safer instruments like forex and stocks as Crypto is still in it's early stages and way too speculative, there is money to be made but I want to get a taste of the other global markets as well. 

With Forex, my plan is to trade 1 year on a demo account until I'm consistently profitable and then start out with a live account of the same size. 

@TrendFollower to address your questions, given the fact that I'm a begginer in FX, I was thinking to focus on EURUSD since it's the most liquid and has the most action, would this be suitable for a 1000$ account to start with?

@Caseynotes I'm looking into MT4 as we speak, to set it up on my demo account and take it from there. 

Thanks a bunch again guys, any other advice that you have for me, much appreciated!

Link to comment
14 minutes ago, Lorinius said:

Thank you all for your insightful replies. Just a little more about myself firstly. I started trading at the top of the Bitcoin bullmarket 2017/18 where needless to say with all the bull action in alt coins it gave me an unrealistic expectation of trading, 200 euros turned int 5k in a matter of weeks with little to no research on the assets. Then the bearmarket started, the profits started to trickle down, still trading like a pile of garbage now that I look back on those days. Then my biggest mistake..I took 5k$ on a loan to trade some more and needless to say all of that money went away in a short period of time. Still paying on that until 2022. Upon further research, every analyst and pro trader tells it the same, that the worst time to get into trading is during bullmarkets...lucky me!

This all really left a bad taste in my mouth but I'm determined to become a better trader, with 100$ I started trading my way up to about 500 now, starting to see progress, getting more composed about my emotions and am currently looking to develop a system. That brings me to you guys, in that, that I'm looking to trade much safer instruments like forex and stocks as Crypto is still in it's early stages and way too speculative, there is money to be made but I want to get a taste of the other global markets as well. 

With Forex, my plan is to trade 1 year on a demo account until I'm consistently profitable and then start out with a live account of the same size. 

@TrendFollower to address your questions, given the fact that I'm a begginer in FX, I was thinking to focus on EURUSD since it's the most liquid and has the most action, would this be suitable for a 1000$ account to start with?

@Caseynotes I'm looking into MT4 as we speak, to set it up on my demo account and take it from there. 

Thanks a bunch again guys, any other advice that you have for me, much appreciated!

Interesting history, better luck I hope going forward. Couple of points, I wouldn't waste too much time on demo, you can't learn to trade on demo, it's ok for learning how the platform works and for trialing strategies but that's it really, it's like expecting to learn to drive with a car up on blocks, there is no risk and never will be. That's why I suggested the mt4 because you can start with pennies and work you way up.

Second is that though FX might have liquidity there is currently no volatility and the many of the majors have been basically going sideways for over a year, consider commodities or indices. I posted recently on a CME report regarding this but can't remember which thread but never mind, take Rolf's word for it, exotics though usually have a high spread which will work against you starting off.

 

image.png.d63e50294d21e912acd2469b59c5a9eb.png

 

Link to comment

Aye, valid points, and I'm aware of the demo account not being the real deal, I just want to take it slow and steady, and the fact that there isn't much action in FX I think for me its also currently a good thing, not looking to get rich quick this right now, I want to develop a system and then I'll look into more volatile markets. That being said, I just installed MT4, any good tutorials that you can point me to? The interface looks pretty dated.

Link to comment

Wherever you see the words 'where money is made' you should also add 'and where the most money is lost'.  There's a high correlation between certain pairs and I don't see any particular reason why you should 'expect' to make more money trading GPB/JPY than GPB/USD, a priori

Link to comment
5 minutes ago, Lorinius said:

Aye, valid points, and I'm aware of the demo account not being the real deal, I just want to take it slow and steady, and the fact that there isn't much action in FX I think for me its also currently a good thing, not looking to get rich quick this right now, I want to develop a system and then I'll look into more volatile markets. That being said, I just installed MT4, any good tutorials that you can point me to? The interface looks pretty dated.

the problem is chop, chop just keeps cutting you up, you need price to swing. make sure you download the IG mt4 apps pack   https://www.ig.com/uk/trading-platforms/metatrader-4/mt4-indicators  

and see this page for vids on what each one does  https://www.thinkmarkets.com/uk/tools/mt4-super/mt4-super-apps/

Don't know any vids on mt4 off hand but a quick search on google should bring up loads.

Link to comment
9 minutes ago, dmedin said:

Wherever you see the words 'where money is made' you should also add 'and where the most money is lost'.  There's a high correlation between certain pairs and I don't see any particular reason why you should 'expect' to make more money trading GPB/JPY than GPB/USD, a priori

GBP is one of the few that does have volatility, the problem is it's due to the Brexit uncertainty and nobody really knows what's going on, for the last 3 years. What normally happens is that due to a nation's change in circumstance a pair need to realign, this can take weeks of trend to achieve but of late those occasions are far fewer. 

Link to comment

For what it's worth, I'll add my two bobs. Despite some of the earlier comments, Lorinius, I think starting out on a Demo account is a very wise idea. If you're not profiting on demo, then how are you gonna profit live?

Starting out with $1,000 probably won't get you very far with IG. There are commissions and stops that can stop you out and just wittle your account down, even though you may be trading reasonably well.

I started with a CFD account that gives leverage on the amount deposited. Even so, at least $3,000-$5,000 would need to be the starting point. Then you can make trades starting with a minimum of $200 each. If you make trades of less than $200, then you risk losing too much money on commissions.

Also, if your account is regarded as "high risk" (something IG evaluate when you open your A/c), then you may find your stops are very wide, which can also destroy your account value. If you can pass IG's short quiz that changes your account status to "low risk," then you can place closer stops, so you get out of losing trades early.

I follow a simple strategy using CFDs on stocks. The strategy does work. I can share this with you if you're interested? If you can meet the criteria I mentioned above, the strategy should work for you, too.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • In the rapidly growing cryptocurrency market, investors face various forms of scam threats. A recent theft case involving a major exchange in Japan highlighted the “fake address trap,” resulting in significant Bitcoin theft. This incident not only revealed how hackers exploit lapses during transactions to commit theft but also underscored potential vulnerabilities in exchange security measures. PTOUNX Exchange has implemented multi-factor authentication and continuous system upgrades to protect the assets of users from similar risks. Through these measures, we strive to ensure the security of every transaction, preventing hackers from exploiting any user negligence. Investor Education: Knowledge as the First Line of Defense Against Scams In the fight against investment scam, investor education and awareness are indispensable. PTOUNX Exchange is committed to disseminating cryptocurrency and investment security knowledge through various channels to reduce user risks caused by information asymmetry. We regularly hold webinars, publish security guides, and update common scam methods and prevention techniques. PTOUNX emphasizes that users must verify every step of a transaction before proceeding, including confirming the legitimacy of the trading platform and checking the accuracy of wallet addresses. Additionally, we encourage users to store large amounts of assets in hardware wallets, as this physical isolation storage method significantly enhances asset security. Our real-time transaction monitoring system can promptly detect abnormal trading behavior, such as unusually large transactions or frequent small transfers, which are often indicators of money laundering or scam. Through proactive monitoring, PTOUNX can quickly take action to prevent potential risks from developing into actual losses. These strategies not only protect user assets but also create a more stable and trustworthy trading environment. Through continuous education and technological innovation, PTOUNX Exchange provides a secure cryptocurrency investment platform for users. Innovative Technology: The Future Protection of Cryptocurrency Trading Facing the complex and ever-changing challenges of cybersecurity, PTOUNX Exchange actively adopts the latest blockchain technologies to enhance security. We believe that by leveraging the transparency and immutability of blockchain, the risk of scam and theft can be greatly reduced. One key technology is the application of smart contracts, which can automatically execute terms of a trading agreement, thus minimizing human errors and opportunities for scam. Moreover, PTOUNX is developing an AI-based anomaly detection system, capable of learning and identifying unusual trading patterns, providing timely warnings to users and management teams. This advanced monitoring technology not only improves response speed but also enhances platform security on multiple levels. Building a Shared Security Line for a Shared Investment Future As the cryptocurrency industry continues to mature and develop, PTOUNX Exchange recognizes that only through continuous innovation and education can we provide a truly secure investment environment for users. We are committed to utilizing cutting-edge technology to enhance our security measures while strengthening user education, ensuring that every investor can make informed decisions based on an understanding of potential risks. At PTOUNX, we are not just a trading platform; we are guardians of investor safety. By collaborating with global security experts and continually updating our security strategies and technologies, we aim to create a worry-free trading environment where every transaction is safe and transparent.
    • Asian stocks rose on Tuesday, tracking gains on Wall Street ahead of comments from several Federal Reserve officials later in the day. The Reserve Bank of Australia kept interest rates on hold at 4.35%, as expected, but warned inflation risks remain. This led traders to cut back bets on an RBA rate cut this year, though the Australian dollar was little changed. Ebbing concerns over European political turmoil also boosted market sentiment. Futures for European stock indexes were higher after gains on Monday. The dollar edged up ahead of US retail sales data, pressuring the euro and pound. The Chinese yuan remained near 7-month lows on mixed economic data from China pointing to a need for more policy support. With multiple Fed speakers on tap, investors are looking for clues on the US rate outlook after last week's Fed decision, with around 45 basis points of cuts priced in for the rest of 2024.
    • ASX: NATIONAL AUSTRALIA BANK LIMITED - NAB   Elliott Elliott Wave Technical Analysis TradingLounge (1D Chart)   Greetings, Our Elliott Wave analysis today updates the Australian Stock Exchange (ASX) with NATIONAL AUSTRALIA BANK LIMITED - NAB . We determine that NAB will continue to push higher with wave iii-grey of wave (iii)-orange. We updated our Trade Recommendation (Long Trade with NAB) yesterday. NAB is opening up quite good profits in today's trading session.   ASX: NATIONAL AUSTRALIA BANK LIMITED - NAB   Elliott Wave Technical Analysis   ASX: NATIONAL AUSTRALIA BANK LIMITED - NAB   1D Chart (Semilog Scale) Analysis Function: Major trend (Minute degree, navy) Mode: Motive Structure: Impulse Position: Wave iii-grey of Wave (iii)-orange of Wave ((v))-navy Details: The short-term outlook suggests wave (iii)-orange is unfolding to push higher.   Invalidation point: 34.48   ASX: NATIONAL AUSTRALIA BANK LIMITED - NAB   Elliott Wave Technical Analysis TradingLounge (4-Hour Chart) ASX: NATIONAL AUSTRALIA BANK LIMITED - NAB   Elliott Wave Technical Analysis ASX: NATIONAL AUSTRALIA BANK LIMITED - NAB   4-Hour Chart Analysis Function: Major trend (Minuette degree, orange) Mode: Motive Structure: Impulse Position: Wave ((3))-navy of Wave iii-grey of Wave (iii)-orange Details: The short-term outlook shows that wave (iii)-orange is opening to push higher, it is subdividing into waves i,ii,iii-grey and waves ((1)),((2)),( (3))-navy. We updated our Trade Recommendation (Long Trade with NAB) yesterday. NAB is opening up quite good profits in today's trading session. Invalidation point: 34.83   Conclusion:   Our analysis, forecast of contextual trends, and short-term outlook for ASX: NATIONAL AUSTRALIA BANK LIMITED - NAB   aim to provide readers with insights into the current market trends and how to capitalize on them effectively. We offer specific price points that act as validation or invalidation signals for our wave count, enhancing the confidence in our perspective. By combining these factors, we strive to offer readers the most objective and professional perspective on market trends.   Technical Analyst: Hua (Shane) Cuong, CEWA-M (Master’s Designation). Source : Tradinglounge.com get trial here!  
×
×
  • Create New...
us