Insufficient Trading Capital - page 2
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Totally agree. Small balance will lead to frustrations during loss. Risk will be also be nearly impossible to manage. Unless you find setups with very tight stops. Good MM is impossible to manage because we cant partially close our position when we are using minimum lots. (.01)
Lets say we have 100USD balance.
Risk=2% or 2USD per trade.
Lots =.01
Trade = once a day with SL = 20 pips (MAX), TP=40pips(2:1 RR, already nice).
IF your HITRATE is 100% = i think impossible
Daily Gain = 4USD
Monthly = 80USD
HITRATE 70% = Very Good System
Monthly Gain = 56USD
HITRATE 50% = Standard
Monthly Gain = 40USD
These values are too small. stress and time is not worth it
If we only use the minimum lots, it would be hard to find setups with 20pips max. There is also a psychological effect because we immediately want to gain money in a small account, this urge will make us trade more resulting to lose and lose more.
On my point of view, we should trade at least .02 lot size and risking 2% of our balance, with an average minimum stop of 40pips. 20 pips stop is way too small, only for tick scalping.
Trading .02 lots, we can partially close our position and trail our orders to max out profits. This gives better MM.
So we should have At least 400-500USD to be able to trade .02LOTS using 40pip SL.
Hyo
Low capital is a big hurdle for good traders to make profits. it do not provide them a flexible chance of trading . In loss they can not trade again to recover it. If skilled traders had sufficient amount of capital they can make good return from it.
I do not think that you need big sum of capital in order for you to begin Forex trading. While 100 USD is a small capital and some claim it as just for attracting so people would deposit, I do not see any problem with this amount. In Forex trading, I think, the question is not how big or small your capital is. The question here is how can you make profit. If your capital is small, the issue, I think, would be how can you make you money big, how can you increase it. And if your capital is bigger, it should be how can you make it bigger.