Is this a silly plan or not?

My current plan is to see if I can make £1000 demo money:
- without going below my starting balance
- all trades £1/pip
- on IG demo spreadbetting on forex because that's all I appear to have access to
- only on the "major" fx pairs as these allow for the closest guaranteed stops

IF I succeed in making a grand over any period of time without falling below my starting balance, then I *want* to deposit £100 and continue the same method of £1/pip, close guaranteed stops so I need minimal margin. Slowly increase balance carefully. Always have fairly close stops that either get hit or make a profit.

I've read about doing trades where your stop is say... 10 pips away but your profit target is say, 3 or more times this away so you are likely to make 3 times more than you might lose. This is my rough plan.. any thoughts?
Is this ridiculous with only £100?

So far I'm up about 300 demo pounds without losing.

elliot.baker.eb said:

. . .So far I'm up about 300 demo pounds without losing.

Click to expand...

Hi Elliot,
Demo trading is wise, if only because if you can't make a profit with funny money, you've got a cat in hell's chance with real money. That said, don't get too excited about it either, as it's nigh on impossible to replicate demo success with a live account. There are numerous reasons for this - top of the list are psychological factors that come into play with real money. In your case, these will be magnified 10 fold as you're going from a £1,000 demo account to a £100 live account.

With regard to profit targets - I'd be very wary of thse if I were you. You're right that many traders have them, but they are usually based on some evidence or research which tells them the probability of their targets being reached. In other words, if you determine that your risk is 10 pts, setting an arbitrary profit target of 30 pts - because that's what you want - is unlikely to yield success in the long run. Remember, the market cares not a jot about what you want.

With a £100 account, you are woefully under capitalized. This means that, pro rata, you're going to be risking much more than is wise on any one trade and utilizing more leverage. In other words, a 100 pt move against you and your account is gone. On the plus side, it is only a £100, so it probably isn't the end of the world. The other big danger is that you enjoy some early success and say, double, triple or quadruple your account in a matter of weeks. Many traders have done this and then extrapolate this out into the future to work out when they can take delivery of a new Ferrari. Don't fall into this trap - it never works out.

Lastly, if you've not yet seen it, take a look at this Sticky as it covers in greater detail some of the points touched on here: Essentials Of 'Risk & Money Management'

Good luck,
Tim.