Trading with small accounts

[jnunes]

Hello all,

By paper trading I managed to earn almost 30% profit since August last year. I'd like to start trading with a real account but don't have the necessary money.

Is there a broker that allows for small accounts (minimum 5000 USD) and at the same time allows no margin (1:1 leverage)? I've found a couple that allow minimum accounts down to 5000 USD but demand minimum amounts for positions as much as 100,000 USD (unacceptable conditions for me).

Does any one know a broker that allows this?

Thank you in advance,
Joao Nunes

 

[danfreek]

Well done, 30% per year is a very respectable return.

I assume that you're talking about forex accounts, given the location of this thread. I don't think it's possible to trade without levarage, and I don't see why you would want to, I don't think I could answer this part of the question fully until I undersand why.

Other than that www.oanda.com have been recomended in this forum before, and having taken a look myself they look quite good. You can open an account with much less than $5000, the only problem being that they charge for withdrawls. I use capital spreads (spread better) because they have tight spreads and don't charge for withdrawls. I have no direct experience of Oanda myself though.

The only other thing is that you say you don't have the nessesary money. Undercapitalistation is one of the main reasons for failure. Of course I wish you the best of luck, but it's definately worth making sure you've got enough capital to trade properly.

 

[neil]

By all means use Oanda or FXCM etc to trade a mini account to get your feet wet but save up a bigger pot to give you a cushion to enable you to cope psychologically with real losing trades. I say this because you will note a dramatic shift in your mental attitude towards trades when real money is on the line.
Good luck.

 

[jnunes]

Hello danfreek, thanks for your message.

I was in fact referring to forex. The reason why I would not want to trade with margin (at least a high margin like 100,000USD to 5,000USD) is that higher margins allow for higher potencial losses. When you use high margins like this one you may lose all your money in a succession of losses.

Moreover, I managed to achieve almost 30% profit by paper trading without using margins. I just imagined using the full size of my account on each position I opened.

When I said that I didn't have the necessary money, I meant that I could only afford to open a 5000 USD account. I definately won't open an account if I have to use wide margins. I never accept more than 2% loss on any position, and wide margins allow more loss than that.

Thanks for the suggestion of oanda.com. I'll have a look.
Joao Nunes

 

[danfreek]

Joao, You definately have the right approach to trading, money management is so important, but it's surprising how many people ignore it.

As you say margin can be dangerous, but only when it isn't used properly. By using a correct position sizing and stop placement, it is entirely possible to limit potential losses. You say that you place the entire $5000 on each trade, the usual minimum size is a $10,000 contract or $1.00 per pip, however, I believe that with Oanda you can trade in much smaller sizes. So what you might want to do is place trades at a value of $0.50 per pip, with leverage you won't need the entire $5000 to fund the position, but your stake size will be equal to using the entire amount without leverage. I hope I have been clear. If I haven't explained myself properly, then please feel free to ask any questions.

 

[Anonymous]

I definitely agree www.fxtrade.oanda.com should be recommended for small to medium size accounts.

It has no minimum trade size, as small as $1. Most of the other mini size contracts of other forex firms require 10,000 minimum, about $1 a pip. With Oanda you can trade, say, $0.01 (or less) a pip.

There is no minimum deposit, I think they accept $100 too. And they accept PayPal, and pay continuous interest on your account.

The best part, the bid-ask spread is about the tightest (except during weekends and volatile trading): EURO/US$ - 1.5 pips, AUD/US$ - 2 pips.

Personally, I think Capital Spreads is cost-effective for its Short Term Interest Rates contracts.

 

[neil]

By all means use Oanda or FXCM etc to trade a mini account to get your feet wet but save up a bigger pot to give you a cushion to enable you to cope psychologically with real losing trades. I say this because you will note a dramatic shift in your mental attitude towards trades when real money is on the line.
Good luck.

I'll get me coat

 

[jnunes]

All right, thank you all for your fast help.

Meanwhile I'll have a look on oanda.com. The conditions you referred are very interesting.

Regards,
João Nunes