Noob question about Money Management
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Thread: Noob question about Money Management

  1. #1
    Hi all,

    I have a newbie question about MM.

    I want to open a live account in near future. I am planning to invest no more than $500 - $1000 for today.

    Now the question, as I understand according to MM I should not risk more than 2% of my core equity, and also have no more than 10% open trades.
    As I understandI need a micro account and after I manage to increase it to $2500 (since 2% of $2500 is $50) I will upgrade it to a mini account.
    But I read a post by dialist where he proposes to open mini account only when one has accumulated $30,000 in the account. However, 2% would be $600 that is 12 miniature lots in 1 trade. Is not that better suited for regular lots?

    Additionally, as a side note, anyone knows a excellent micro broker, which allows simple appliions for international traders. I am currently demoing with InterbankFX, but unfortunately they do not seem to offer micro accounts (they state they do to the site but MT4 does not seem to get that choice ) and require jumping thru hoops (i.e tons of documents ) in order to open an account,

    Thanks for the help!

  2. #2
    FXSolutions supplies a account.


    Quote Originally Posted by ;
    Hi ,

    I have a newbie question about MM.

    I would like to start a live account in close future. I am planning to commit no more than $500 - $1000 for today.

    Now the question, as I understand according to MM I should not risk more than 2% of my core equity, and have no more than 10% open trades.
    As I understandI need a micro account and after I manage to raise it to $2500 (as 2% of $2500 is $50) I will update it to a mini account.
    But I read a post by dialist where he proposes to open mini account just when one has accumulated $30,000 from the account. But, 2% will be $600 that is 12 miniature lots in 1 trade. Isn't that better suited to standard lots?

    Additionally, as a side note, anyone knows a good micro broker, which allows easy appliions for international traders. I am currently demoing using InterbankFX, but sadly they don't seem to provide micro accounts (they state they do to the website but MT4 does not seem to get that option) and need jumping thru hoops (i.e heaps of files ) in order to start an account,

    Thanks for your help!

  3. #3
    I am not sure about the join procedure with InterBanks (I am still only demoing) but I believe you just need two pieces of I.D.

    As for Micro accounts, go to their site and http://www.interbankfx.com/open_a_demo.php you're going to be Emailed a connection for download MetaTrader after filling out the form.

    I know you will say I have downloaded it from MetaQuotes; however, the one which you download from InterBank has the Option to make a typical account, or Mini account.

    With account, you are able to exchange Micro lots, as clarified on http://www.patricknouvion.com/IBFX/v...ght=micro lots.

  4. #4
    Quote Originally Posted by ;
    Hi ,

    I have a newbie question about MM.

    I would like to start a live account in near future. I am planning to commit no more than $500 - $1000 for now.

    Currently the query, since I understand according to MM....

    Thanks for your help!
    MM isn't an specific mathematical science. There simply arent fixed rules out there around MM.

    MM is a mixture of the two numerical and plogical facets. 2 percent of a $1,000 is a lot different than 2 percent of $100,000. That is why depositing as low as $500 doesnt help at all. If you lose all of it, you won't care. You are likely to be very competitive and take on large risks. And you may learn bad habits. When it's time to deposit the big money, you carry on these bad habits along with you trading style and the harm will be even larger.

    My recommendation is not to open an account with less than $10,000. However, this is just my thoughts of course.

  5. #5
    MM is just mathematical. There are rules on the market. 2% is 2%. Should you deposite $500 and are extremely competitive, taking on large risks, you are not utilizing your math. Your MM. But I've my own MM query:

    whenever you've got an open commerce, and you're discovering your risk capital to get a second trade, by taking 2% of your equity, do you utilize your current equity, or should one calculate what that equity would be if the currently available commerce loses? It's not rocket science, but I am convinced it makes a difference.

    Quote Originally Posted by ;
    MM isn't an exact science. There simply arent fixed rules out there.

    MM is a mixture of the two numerical and plogical facets. 2 percent of a $1,000 is a lot different than 2 percent of $100,000. That is why depositing as low as $500 doesnt help at all. You won't care Should you lose it all. You're going to be somewhat competitive and take on large risks. And you might learn bad habits. And when it's time to deposit the big money, you carry on those bad habits with you trading fashion and the harm will be even bigger.

    My recommendation is to not open an account with less than $10,000. But this is only my thoughts of course.

  6. #6
    Quote Originally Posted by ;
    MM is exactly mathematical. There are fixed rules on the market. 2% is 2%. Should you deposite $500 and are extremely competitive, taking on big risks, you aren't using your math. Your MM. But I've my own MM question:
    whilst cash management is mathematical, it is not the exact same for everyone. If you think everyone is best off trading 2 percent per commerce, you are wrong. There are systems out there which risk a whole lot greater than 2% per transaction, and believe it or not, they're successful.

  7. #7
    Yes but you need to agree, 2 percent is in fact, 2%.

    Quote Originally Posted by ;
    While money management is mathematical, it is not the same for everybody. If you believe everybody is best off trading 2 percent per commerce, you are wrong. There are systems out there that risk much greater than 2% each commerce, and believe it or not, they are successful.

  8. #8
    Quote Originally Posted by ;
    While cash management is mathematical, it is not the exact same for everybody. If you believe everybody is greatest off trading 2% per trade, you're wrong. There are systems out there which risk much greater than 2% each trade, and believe it or not, they are successful.
    The very risky I saw contains VAR = 10-14% in every trade and... is powerful...

  9. #9
    Quote Originally Posted by ;
    The most risky I saw contains VAR = 10-14% in every trade and... is powerful...
    That person is quite blessed to have a system that supports a lot risk. Fortunate working.

    But when calculating that 10%, do you believe s/he uses the current standing equity ammount, or utilizes the current equity minus the total possible loss of all available trades. Does this make sense?

  10. #10
    Quote Originally Posted by ;
    This individual is quite blessed to have a system which supports so much risk. Fortunate = difficult working.

    However, when calculating that 10 percent, do you believe s/he employs the current status equity ammount, or uses the current equity minus the total potential loss of all open trades. Does this make sense?
    As far as I know he opens to 2 trades concurrently with the same amount. Thanks for your query...

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