Account Size

This is a discussion on Account Size within the General Trading Chat forums, part of the Reception category; I've been trading using the free bonus money on a number of accounts over the last year or so....every one ...

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Old Apr 15, 2009, 9:51am   #1
 
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Question Account Size

I've been trading using the free bonus money on a number of accounts over the last year or so....every one is now blown !

What I am finding is that £100 - £200 is not enough to allow proper stop placement and money management, also I feel I am overtrading as I want to grow the account aggresively. this is leading to failure after failure. 1 or 2 trades can blow 50% of the account.

With a demo account of say a £10k though, I can make money.

so my question is what is the IDEAL acount size, £1000 to start with ?
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Old Apr 15, 2009, 10:36am   #2
 
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As you say, an amount that gives you a sufficient cushion so you can take a reasonable amount of losses before being wiped out. You must have heard this all before though, it must be painful when you lose (or you will continue to make the same mistakes) but not too painful that you can't afford to lose the money!

Also in my opinion using 'free' money doesn't show the commitment needed for success, its much easier to 'gamble' with money that you didn't work for.
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Old Apr 15, 2009, 10:39am   #3
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No less than $50,000. This doesn't mean you then start trading $500 a point, it means that the risk is comfortable enough so that it feels like a game, whilst still making a reasonable income.
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Old Apr 15, 2009, 11:03am   #4
 
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advfntrader started this thread yes but with £1000 and using only 50p per point you could still feel comfortable. its about having enough margin to have a few losers and still feel OK
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Old Apr 15, 2009, 11:15am   #5
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But what will you do with that, except - pocket money?

$ 50.000 sounds about right to me to also be worth ones time.
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Old Apr 15, 2009, 11:18am   #6
 
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Quote:
Originally Posted by advfntrader View Post
yes but with £1000 and using only 50p per point you could still feel comfortable. its about having enough margin to have a few losers and still feel OK
From a starting out point of view, for me it's a simple mathematical calculation:

1) Work out the markets you are going to trade and what the minimum per point is - say 50p

2) Depending on your chosen style of trading, work out your maximum stop position on a trade - for me with forex it's approx. 90 pips

3) Define your money management rules - how much you are prepared to lose per trade - in my case no more than 2%

Capital required to trade = £2,250

Assuming you've demo'ed the system then you should be able to combine this with an expectancy rate / metrics to see what sort of income this will produce.

All of the above is subject to the fact (as I've learnt) that the expectancy rate will go down when real money is at stake and also that the key is to be comfortable with your money management rules. In other words my system means the most I will ever lose by being wrong is £45 - can my account suffer a string of these losses (firstly) and (secondly) am I personally comfortable with losing this sum of money? If the answer to either of those question is 'no' then something is wrong!!
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Old Apr 15, 2009, 12:47pm   #7
 
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Any amount where you're not hugely over-leveraged really.

Depends what you want from trading. If you want it to be a full-time income 1k won't cut it. If you want a part-time income then you may not wish to put 30k in for example. Horses for courses..Some people on here have made tidy sums starting from 5p/pip so don't feel bad starting there.
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Old Apr 15, 2009, 12:53pm   #8
 
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I started with 2k and set up a site to follow my trades Financial spread betting diary trading FTSE 100, S&P and Dow Jones. but quickly found out that you need over 5k to cover margins. If I was doing it again I may start with 2k to see what the various providers offer but once I started trading 5k.
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Old Apr 15, 2009, 1:28pm   #9
 
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advfntrader started this thread you built it up to over £11k ? good going !


Quote:
Originally Posted by Trading2k View Post
I started with 2k and set up a site to follow my trades Financial spread betting diary trading FTSE 100, S&P and Dow Jones. but quickly found out that you need over 5k to cover margins. If I was doing it again I may start with 2k to see what the various providers offer but once I started trading 5k.
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Old Apr 15, 2009, 4:12pm   #10
 
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Originally Posted by kitejedi View Post
From a starting out point of view, for me it's a simple mathematical calculation:

1) Work out the markets you are going to trade and what the minimum per point is - say 50p

2) Depending on your chosen style of trading, work out your maximum stop position on a trade - for me with forex it's approx. 90 pips

3) Define your money management rules - how much you are prepared to lose per trade - in my case no more than 2%
Bingo! This is all there is to it. Once you understand these three factors you can answer the question by yourself, based on your personal risk tolerance and trading system.

I'd highly recommend against trading with the "free $100" offers available on the net because they teach you bad habits and it is impossible to trade with proper rules since most of them only offer micro accounts ($0.10 a pip), as opposed to nano accounts ($0.01 a pip). Try running a proper risk management system on a mini with $100 - it's essentially impossible.

Once you gain some experience you will learn that account size is irrelevant, it all comes down to risk management. Personally, I'd suggest at least $3000 for a micro account using a method that risks 2% per trade, but this is highly subjective and very dependant on the system you trade.

If you are strapped for cash, I highly suggest you open an account at Oanda, Marketiva, or another broker that allows you to define how much each pip is worth. If you do this you can apply proper risk management to an account of any size, no matter how small.
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