Newbie question -- lots and leverage
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Thread: Newbie question -- lots and leverage

  1. #1
    Hello all,

    Please do not fire me, I am a newbie I tried to read the tacky but it went over my head.

    So I've demo-ed for a few months and want to start a live account to begin'setting' trading with real money.

    However, I can't get my thoughts about leverages, lot dimensions and so on. My aim is to trade EURUSD using $1000 at $1/pip (Is this the wrong way of thinking?) .

    So I look at Onada plus they offer leverages from 50:1 and below and I didn't find any mention of mini accounts -- so I guess it's normal lot size? To get the $1/pip I am searching for -- state that I open a account, deposit $1000 using the leverage 50:1, I put in a trade with 0.1 lot, and then I am trading with $1/pip, is that correct?

    Finally, which is the very advoed MT4 broker for novices? I've tried to search but there are many threads pointing in a lot of directions that I get lost.

    Thanks,
    Divya

  2. #2
    Here's a newbie response to your newbie question. I think you need more studying and training before you deposit real money. No offense, but you need to get the fundamentals down packaged prior to investing. Do the demonion.

    You also must figure out what time period you are going to trade on. And figure out your stop losses, so making sure that in the event that you eliminate the transaction, it would take out only 2% of your capital.

    but. . I am convinced more seasoned traders may give you more than this

  3. #3
    Quote Originally Posted by ;
    Hello all,

    Please don't flame me, I am a newbie I tried to read the sticky but it went over my head.

    So I've demo-ed for a few months and want to open a live account to begin'setting' trading with real money.

    But I still can't get my head around leverages, lot sizes and the like. My aim is to trade EURUSD using $1000 at $1/pip (Is this the wrong way of thinking?) .

    So I look at Onada and they offer leverages from 50:1 and below and I didn't see any mention of mini accounts -- so I figure it's standard lot size? To get the $1/pip I am searching for -- state that I open a account, deposit $1000 using all the leverage 50:1, I put in a trade with 0.1 lot, then I am trading with $1/pip, is this correct?

    Ultimately, which is the most recommended MT4 broker for novices? I have tried to search but there are so many threads going in a lot of directions that I have lost.

    Thanks,
    Divya
    Don't worry that it went over your head Divya. Just read through these stickys over and over and play with some numbers on paper. I am no dummy, but it took me a while to receive my head wrapped around this material. Just keep exposing yourself to it and playing with the numbers and your brain will shortly put it all together for you in which it makes sense.

    Trading with actual money will definitely accelerate your understanding, but you need to do it using quite compact position sizes. You said you want to have $1 per pip on a $1000 account. Dude, this is 10:1 leverage and can be much to large for a beginner to handle. It will hurt you.

    Everything you'll need, at a maximum, would be to open a micro (not mini) account. I recommend FX Solutions as the broker. You may then trade 10 pennies per pip which is 1:1 leverage. Even in case you lose 100 pips, you've just lost $10 which is just 1 percent of your $1000.

    Another option is the Oanda account, which lets you have pip values much more compact than a micro account. For some folks, this may be appropriate, but my personal opinion is that while your position dimensions should be as little as possible, there's also a point where if it is too little, it stops feeling like actual money, and begins feeling like a demonion again. Your position size has got to be just large enough so you feel a small bit of pain. Just a small mind you. Enough to accelerate your understanding, while still affording minimal risk.

    Instead of rehash what I have already covered in my posts, I would like you to do so for me. Reply with an explanation of the way you currently know the relationship between (1) Account dimensions, (2) Stop dimensions, (3) Percentage risk, (4) Lot size, (5) Broker leverage, and (6 ) ) True Leverage.

    Begin by providing a definition of each and explaining how they relate to each other.

    Don't be fearful of getting it completely wrong. No one here is going to give you a difficult time. If you will do so, it is going to give me an idea of where you are and we can go from there.

    As for brokers, I have already mentioned the two that I like.

    Dial

  4. #4
    Stay together with you demo account before:
    1) you never implement an order wrong. This is not about when to enter and when to exit, its about being able to utilize the app. If you're able to enter 100 transactions rather than make a mistake then you know your platform. In addition, you must know what buy stops, market limit and all the remaining trades types are and if and where you ought to use them. This is all about knowing how to use your platform and how to leverage it most effectively. You can easily loose a large proportion of your account by not know the way your platform functions. You dont need to pay your broker to teach this when you can learn it at no cost.

    2) you have a complete trading egy planned out and you're trading it successfully and earning profit.
    Https://www.forexsoutheast.asia/gene...ed-charts.html

    3) you find no longer benifit on the demo in the way of emotional training. Some folks simply cant simulate the emotion of trading without having cash at stake. You can exchange a demo for 2 years get a micro account and opt to stop trading after the very first trade because they are so different. The demo isnt even close.

    4) you have $300-$500 you dont need any longer. You will most definately loose it all.

    As soon as you're ready to get a MICRO account. $0.10 a pip.

    Figuring out your risk is straightforward: lots*pip value*stop reduction. Say you have 3 micro lots, you're trading gbp/usd (0.10 a pip for micro) along with also a stop reduction of 35. You have 3*.1*35 = $10.50 at risk. How do you know how much it is possible to risk? Most men and women start with only a proportion of their whole account. In the event you have $500 and you would like to risk 1 percent it is possible to risk $5. There are other ways to do this, I would suggest investing in cash management books.

    I dont need to offer you that patience, dediion and exercise speech, its your money, you know what is ideal for it. But I would say if you dont have a size positioning egy then you havent completed #2 however.

  5. #5
    Thank you all for your informative posts. So far my demo-ing has involved jumping from 1 system posted in the forum into another. But in this process I've happened to ignore the actual inner workings of the trading.lt;ogt;lt;/ogt;

    Of course I might wait longer before spending actual money but I am not loving demo-ing anymore. I know in all likelihood I will wipe a real account but I wish to feel the loss as I think it'll help me accelerate the learning process.lt;ogt;lt;/ogt;

    Dial,lt;ogt; lt;/ogt;

    Thank you for asking me those questions. I didn't actually investigate most of these matters until you asked them. But let me know if I understand them correctly now:lt;ogt;lt;/ogt;

    Definitions:lt;ogt; lt;/ogt;

    (1) Account sizelt;ogt;lt;/ogt;
    Cash in the account together with the broker.lt;ogt; lt;/ogt;

    (2) Stop sizelt;ogt;lt;/ogt;
    quantity of pips before an open exchange is closed -- to prevent any further losses.lt;ogt;lt;/ogt;

    lt;ogt;lt;/ogt;(3) Percent risklt;ogt;
    lt;/ogt;Amount of the account size being risked per trade.lt;ogt;lt;/ogt;

    (4) Lot sizelt;ogt;
    lt;/ogt;Size of transaction made by the broker on the customer's behalf, may be Standard (100k), Micro (10k), Mini (1k). Lt;ogt;lt;/ogt;

    lt;ogt;lt;/ogt;(5) Broker leveragelt;ogt;lt;/ogt;

    lt;ogt;lt;/ogt;The maximum leverage given by the broker on the account.lt;ogt;lt;/ogt;

    (6) Authentic leveragelt;ogt;
    lt;/ogt;The leverage used per trade.lt;ogt;lt;/ogt;

    Relationships:lt;ogt;lt;/ogt;

    lt;ogt;lt;/ogt;With assistance from witchazel:lt;ogt;lt;/ogt;

    lt;ogt;lt;/ogt;Percent Risk = (cease size*pip value*lots*100)/account sizelt;ogt;lt;/ogt;
    True Leverage = (position size/account size) -- from the stickylt;ogt;lt;/ogt;

    So together with the principles outlined in this thread:lt;ogt;lt;/ogt;

    - do not risk more than 2%/tradelt;ogt;lt;/ogt;
    - use 1:1 true leveragelt;ogt;lt;/ogt;
    - start using a micro accountlt;ogt; lt;/ogt;

    I get the following characters:lt;ogt;lt;/ogt;

    Account size: $1000lt;ogt;lt;/ogt;
    lt;st1lace w/ st=ongt;Lotlt;/st1lacegt; size: microlt;ogt;lt;/ogt;
    Percent Risk: 2%lt;ogt;lt;/ogt;
    True Leverage: 1:1lt;ogt;lt;/ogt;

    for any particular trade with 1 mini lot:

    Worth per pip (xxx/usd): 10c/piplt;ogt; lt;/ogt;lt;ogt;
    lt;/ogt;Authentic Leverage: standing size/account size = 1000/1000 = 1:1lt;ogt;lt;/ogt;
    Stop Loss: (percent risk*account size)/(lots*pip value*100) = (2*1000)/(1*0.10*100) = 200 pipslt;ogt;
    lt;/ogt;

    Can this right?lt;ogt;
    lt;/ogt;

    Thanks,lt;ogt;lt;/ogt;
    Divya

  6. #6
    Quote Originally Posted by ;
    Thank you all for your informative posts. So much my demo-ing has involved jumping from 1 system posted in the forum into the next. But in this process I've happened to dismiss the actual mechanics of the trading.lt;? Xml:namespace prefix = o /gt;lt;ogt;lt;/ogt;

    Of course I can wait more before spending actual money but I am not enjoying demo-ing anymore. I understand in all likelihood I'll wipe out a real account but I wish to feel the loss as I think it'll allow me to accelerate the learning process.lt;ogt;lt;/ogt;

    Dial,lt;ogt; lt;/ogt;

    Thanks for asking me those questions. I didn't actually investigate most of these things before you asked them. But let me understand if I understand them right now:lt;ogt;lt;/ogt;

    Definitions:lt;ogt; lt;/ogt;

    (1) Account sizelt;ogt;lt;/ogt;
    Cash in the account together with the broker.lt;ogt; lt;/ogt;
    Yes, or for large accounts, most is kept in an insured bank account, with just enough in the brokerage account to cover margin and a little more to allow for trade movement.

    (2) Stop sizelt;ogt;lt;/ogt;
    quantity of pips before an open commerce is closed -- to avoid any further losses. Correct.

    Lt;ogt;lt;/ogt;(3) Percent risklt;ogt;
    lt;/ogt;Amount of this account size being risked per trade.lt;ogt;lt;/ogt;
    Correct.
    (4) Lot sizelt;ogt;
    lt;/ogt;Size of trade produced by the broker on the client's behalf, can be Standard (100k), Micro (10k), Mini (1k). Lt;ogt;lt;/ogt;
    True, but it's your decision, not the broker's. You decide this when you start the account.
    Lt;ogt;lt;/ogt;(5) Broker leveragelt;ogt;lt;/ogt;

    lt;ogt;lt;/ogt;The highest leverage given by the broker on the account.lt;ogt;lt;/ogt;
    Correct. The maximum leverage provided by a broker should be selected when you start an account. Not because you'll ever use it, but because is reduces the margin requirements. Possessing the smallest possible margin requirements is helpful in specific types of hedge egies.
    (6) True leveragelt;ogt;
    lt;/ogt;The leverage used per trade.lt;ogt;lt;/ogt;
    Correct. Defined as Account Size / Position Size. The smaller the better. Overleveraging is a fast path to the poor house. Keep it below 5:1 until you gain experience, and even then keep it under 10:1. (I am sure to get some argument on this, but better safe than losing all of your money trying to become rich quick.
    Relationships:lt;ogt;lt;/ogt;

    lt;ogt;lt;/ogt;Together with the help from witchazel:lt;ogt;lt;/ogt;

    lt;ogt;lt;/ogt;Percent Risk = (cease size*pip value*lots*100)/account sizelt;ogt;lt;/ogt;
    No formula is needed. You simply decide on a value; 1%, 2%, 3% etc.,. Using the formula above gets the process backward. It is supposing the number of lots is currently known. State your percent risk and from that decide your position size in lots. Do not decide how many lots and then work out the percent risk.

    True Leverage = (place size/account dimensions ) -- in the stickylt;ogt;lt;/ogt;
    Well, if it is in the tacky, it needs to be correct!
    So with the principles outlined in this thread:lt;ogt;lt;/ogt;

    - don't risk more than 2 percent /commerce correctlt;ogt;lt;/ogt;
    - use 1:1 true leverage re-read the stickies. Leverage is decided from your dollar risk amount, stop size, and account type. You can't say it beforehand if you are already saying the percent risk.
    - start with a micro accountlt;ogt; CORRECT!! Absotutely, posilively! Given the specific same trades, you will actually make more money with a micro account than with a mini account. Lt;/ogt;

    I get the following figures:lt;ogt;lt;/ogt;

    Account size: $1000 a specified
    lt;? Xml:namespace prefix = st1 /gt;lt;st1lace w/ st=ongt;Lotlt;/st1lacegt; dimension: micro a specified
    Percent Risk: 2 percent a givenlt;ogt;lt;/ogt;
    True Leverage: 1:1 not a given. Have to be calculated.lt;ogt;lt;/ogt;

    For a given commerce with 1 mini lot: I think you meant micro as you're using a pip value of 10c below.

    Value per pip (xxx/usd): 10c/piplt;ogt; lt;/ogt;lt;ogt;
    lt;/ogt;True Leverage: position size/account dimension = 1000/1000 = 1:1lt;ogt;lt;/ogt;
    Stop reduction: (percent risk*account dimension )/(lots*pip value*100) = (2*1000)/(1*0.10*100) = 200 pipslt;ogt;
    lt;/ogt;
    Stop reduction isn't based on a calculation. You decide it in the technicals and price action on your chart. True Leverage in your example would just be 1:1 in the event that you have chosen to restrict yourself to 1 micro lot for safety while you are getting a feel for trading reside money, which I presume is your purpose here. Quite great.
    Is this right?lt;ogt;
    lt;/ogt;

    Divya, I really appreciate you are taking the opportunity to answer these concerns. It is a refreshing change from several people who are interested in being spoon fed without any attempt on their part. You're gonna do Okay!!!

    Thanks Divya!!
    Thanks,lt;ogt;lt;/ogt;
    Divya
    .

  7. #7
    Hi Dial,

    Thank You for your encouraging comments. Since beginning this thread I've understood how much work is ahead of me before I can begin to become familiar with trading. I've opened an account with FX Sol -- but I will not make my first live trade till I've:

    Finished reading the three books you mentioned in Frequently Asked Questions sticky Developed and tested a trend-following technical system based on ideas and techniques posted in this forum (this isactually, a system that works for me) End comprehension major economic news along with their Effect on the market Thanks Dial and everybody else for their aid

    Regards,
    Divya

  8. #8
    Daily I demo is a day longer I have cash in the bank. . .Long livethe demo!!!

    Quote Originally Posted by ;
    Thank you for your informative posts. So much my demo-ing has entailed leaping from one system posted in the forum to the next. But in this process I have happened to dismiss the actual mechanics of the trading.lt;ogt;lt;/ogt;

    Of course I might wait longer before spending actual money but I am not loving demo-ing anymore. I understand in all likelihood I will wipe a real account but I want to feel the loss as I think that it'll help me accelerate the learning process.lt;ogt;lt;/ogt;

    Dial,lt;ogt; lt;/ogt;

    Thanks for asking me these questions. I didn't really investigate most of these matters until you asked them. However, let me understand if I understand them correctly now:lt;ogt;lt;/ogt;

    Definitions:lt;ogt; lt;/ogt;

    (1) Account sizelt;ogt;lt;/ogt;
    Cash in the account with the broker.lt;ogt; lt;/ogt;

    (2) Stop sizelt;ogt;lt;/ogt;
    quantity of pips before an open trade is shut -- to protect against any further losses.lt;ogt;lt;/ogt;

    lt;ogt;lt;/ogt;(3) Percent risklt;ogt;
    lt;/ogt;Amount of this account size being risked per trade.lt;ogt;lt;/ogt;

    (4) Lot sizelt;ogt;
    lt;/ogt;Size of transaction produced by the broker on the customer's behalf, may be Standard (100k), Micro (10k), Mini (1k). Lt;ogt;lt;/ogt;

    lt;ogt;lt;/ogt;(5) Broker leveragelt;ogt;lt;/ogt;

    lt;ogt;lt;/ogt;The maximum leverage given by the broker on the account.lt;ogt;lt;/ogt;

    (6) Authentic leveragelt;ogt;
    lt;/ogt;The leverage utilized per trade.lt;ogt;lt;/ogt;

    Relationships:lt;ogt;lt;/ogt;

    lt;ogt;lt;/ogt;With assistance from witchazel:lt;ogt;lt;/ogt;

    lt;ogt;lt;/ogt;Percent Risk = (cease size*pip value*lots*100)/account sizelt;ogt;lt;/ogt;
    True Leverage = (position size/account size) -- in the stickylt;ogt;lt;/ogt;

    So with the principles outlined in this thread:lt;ogt;lt;/ogt;

    - do not risk more than 2 percent /tradelt;ogt;lt;/ogt;
    - utilize 1:1 true leveragelt;ogt;lt;/ogt;
    - begin with a micro accountlt;ogt; lt;/ogt;

    I get these figures:lt;ogt;lt;/ogt;

    Account size: $1000lt;ogt;lt;/ogt;
    lt;st1lace w/ st=ongt;Lotlt;/st1lacegt; dimension: microlt;ogt;lt;/ogt;
    Percent Risk: 2%lt;ogt;lt;/ogt;
    True Leverage: 1:1lt;ogt;lt;/ogt;

    for any particular commerce with 1 mini lot:

    Value per pip (xxx/usd): 10c/piplt;ogt; lt;/ogt;lt;ogt;
    lt;/ogt;Authentic Leverage: position size/account dimension = 1000/1000 = 1:1lt;ogt;lt;/ogt;
    Stop Loss: (percent risk*account size)/(lots*pip value*100) = (2*1000)/(1*0.10*100) = 200 pipslt;ogt;
    lt;/ogt;

    Is this right?lt;ogt;
    lt;/ogt;

    Thanks,lt;ogt;lt;/ogt;
    Divya

  9. #9
    Quote Originally Posted by ;
    Hello all,

    Please do not flame me, I'm a newbie I attempted to read the tacky but it went over my head.

    So I've demo-ed for a few months and want to open a live account to start'setting' trading with real money.

    However, I still can't get my head around leverages, lot sizes and so on. My aim is to exchange EURUSD using $1000 at $1/pip (Is this the wrong way of thinking?) .

    So I look at Onada plus they offer leverages from 50:1 and under and I did not see any mention of mini accounts -- so I figure it's normal lot size? To find the $1/pip I'm looking for -- say that I open a account, deposit $1000 using the leverage 50:1, I put in a trade with 0.1 lot, and then I'm trading with $1/pip, is that correct?

    Ultimately, which is the most advoed MT4 broker for beginners? I have tried to search but there are so many threads pointing in so many directions that I have lost.

    Thank you,
    Divya
    Hello,
    yes, thats right
    01. Lots, which is 10.000 is equal to 1$ a pip.

    I believe 1$ a pip is a lot if you start and have just 1000 on account

    Bye

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