Forex Account Management
Forex Account Management from Mr. Aleksandrov by Forex Academy: https://eaforexacademy.com/
Today I will talk about the Forex account management, which is essentially important while you are trading.
I don't want to suggest anybody with starting amounts. This is a personal choice.
It depends on how much you can afford.
It depends on how much you want to risk.
What I like to say is that you should never be risking more than 10% of your saved money. And I have covered that in my newest course, The Cryptocurrency Investment, where I teach the same.
Don't ever put in a real account all your savings, things might go wrong.
You might lose it all.
You should stay really safe with no more than 10% of the account.
If you have $10,000 saved and you open a live account with $1,000, this is just fine.
And from this $1,000 account, you should not risk more than 2-5% for
manual trading.
So if you're trading manually and you have a $1,000 live account and you're risking 5% maximum, this is $50. And if you have 5 different trades, each one, the maximum risk should be $10. Which means total risk, $50 if all 5 trades go wrong, which usually doesn't happen.
And this is the idea of diversification.
If you have 5 trades, they should be based on 5 different strategies. So the chance that all of them go wrong is smaller.
So, one more time, if you have $10,000, you should open a live account with $1,000, 10% of your savings. And from there, if you're risking 5% per day, this is the very good Forex account management you can keep.
This is $50.
Diversify that on 5 different trades based on 5 different strategies and you will have a very small risk of $10 per trade or per strategy. And this is very important because the market is different every day, which means that one strategy will be profitable at one moment and tomorrow it might be losing.
But when you have 5 different strategies and you are trading at the same time or you're trading them simultaneously, well, they will compensate each other.
And this is for manual trading.
Now, when it comes to algorithmic trading, things are different there. With
EA Studio, especially what I show in my courses, we have a better risk
diversification because we can trade with hundreds of Expert Advisors.
Now, if I stick to the same example, $10,000 saved money, you open a live account with $1,000, how much should you be risking with the Expert Advisors?
Again, no more than 5%. And it's up to you.
If you want to trade 5, 10, or 100 strategies. With EA Studio we have the chance to create so many Expert Advisors that you could be trading 100 strategies in a portfolio Expert Advisor.
For example, if you go with 0.01 lot, you can do that. In a $1,000 account, I would suggest you have no more than 10 Expert Advisors with 0.1 lot.
Or you might have 100 Expert Advisors with 0.01 lot. That would work fine as well. And quite often I receive the question for the Expert Advisors like how many in one account, for how many currencies.
I would suggest you stick to no more than 3 currency pairs and that way it will be a little bit harder for you to manage it. And if you use the portfolio Expert Advisor, it will be easier.
This is why in the ultimate Forex trading course I include 99 Expert Advisors which should be loaded on different charts.
But in the portfolio courses, the EURUSD, the 100 EURUSD, the 100 GBPUSD, and the Walk Forward optimization, there I include portfolio Expert Advisors which means that you can add all of them to a single chart and they trade.
And I show the courses on how to follow the results.
But what I wanted to say is stick to the same Forex account management. And something very important I would like to say again is when you block $10 from your account, this is the margin, it doesn't mean you're risking $10.
The risk is always the Stop Loss.
That's a common mistake by the beginner traders.
The proper way is first to see what is the range of the Stop Loss. For example, in automated trading, I use usually from 10 pips to 100 pips.
So it's never more than 100 pips so I know where is the risk. But the proper way to do the Forex account management before trading is to calculate how much you will be risking if the price hits your Stop Loss.
This is the risk.
When the price hits the Stop Loss, you're losing.
This is the risk.
It's not how much you are blocking from the account. So the right way is to calculate the Stop Loss, what is the distance, how much you can afford to trade with, what will be the lot, so you will fit in your Forex account money management.
Not the other way around.
Usually, people first decide how much they will be risking, and they open the trade, and the Stop Loss turns out to be more than what they expect to lose.
So first, calculate the Stop Loss distance, see how much you can trade with, what will be the lot, and fit it in your Forex account management.
Today I will talk about the Forex account management, which is essentially important while you are trading.
I don't want to suggest anybody with starting amounts. This is a personal choice.
It depends on how much you can afford.
It depends on how much you want to risk.
What I like to say is that you should never be risking more than 10% of your saved money. And I have covered that in my newest course, The Cryptocurrency Investment, where I teach the same.
Don't ever put in a real account all your savings, things might go wrong.
You might lose it all.
You should stay really safe with no more than 10% of the account.
If you have $10,000 saved and you open a live account with $1,000, this is just fine.
And from this $1,000 account, you should not risk more than 2-5% for
manual trading.
So if you're trading manually and you have a $1,000 live account and you're risking 5% maximum, this is $50. And if you have 5 different trades, each one, the maximum risk should be $10. Which means total risk, $50 if all 5 trades go wrong, which usually doesn't happen.
And this is the idea of diversification.
If you have 5 trades, they should be based on 5 different strategies. So the chance that all of them go wrong is smaller.
So, one more time, if you have $10,000, you should open a live account with $1,000, 10% of your savings. And from there, if you're risking 5% per day, this is the very good Forex account management you can keep.
This is $50.
Diversify that on 5 different trades based on 5 different strategies and you will have a very small risk of $10 per trade or per strategy. And this is very important because the market is different every day, which means that one strategy will be profitable at one moment and tomorrow it might be losing.
But when you have 5 different strategies and you are trading at the same time or you're trading them simultaneously, well, they will compensate each other.
And this is for manual trading.
Now, when it comes to algorithmic trading, things are different there. With
EA Studio, especially what I show in my courses, we have a better risk
diversification because we can trade with hundreds of Expert Advisors.
Now, if I stick to the same example, $10,000 saved money, you open a live account with $1,000, how much should you be risking with the Expert Advisors?
Again, no more than 5%. And it's up to you.
If you want to trade 5, 10, or 100 strategies. With EA Studio we have the chance to create so many Expert Advisors that you could be trading 100 strategies in a portfolio Expert Advisor.
For example, if you go with 0.01 lot, you can do that. In a $1,000 account, I would suggest you have no more than 10 Expert Advisors with 0.1 lot.
Or you might have 100 Expert Advisors with 0.01 lot. That would work fine as well. And quite often I receive the question for the Expert Advisors like how many in one account, for how many currencies.
I would suggest you stick to no more than 3 currency pairs and that way it will be a little bit harder for you to manage it. And if you use the portfolio Expert Advisor, it will be easier.
This is why in the ultimate Forex trading course I include 99 Expert Advisors which should be loaded on different charts.
But in the portfolio courses, the EURUSD, the 100 EURUSD, the 100 GBPUSD, and the Walk Forward optimization, there I include portfolio Expert Advisors which means that you can add all of them to a single chart and they trade.
And I show the courses on how to follow the results.
But what I wanted to say is stick to the same Forex account management. And something very important I would like to say again is when you block $10 from your account, this is the margin, it doesn't mean you're risking $10.
The risk is always the Stop Loss.
That's a common mistake by the beginner traders.
The proper way is first to see what is the range of the Stop Loss. For example, in automated trading, I use usually from 10 pips to 100 pips.
So it's never more than 100 pips so I know where is the risk. But the proper way to do the Forex account management before trading is to calculate how much you will be risking if the price hits your Stop Loss.
This is the risk.
When the price hits the Stop Loss, you're losing.
This is the risk.
It's not how much you are blocking from the account. So the right way is to calculate the Stop Loss, what is the distance, how much you can afford to trade with, what will be the lot, so you will fit in your Forex account money management.
Not the other way around.
Usually, people first decide how much they will be risking, and they open the trade, and the Stop Loss turns out to be more than what they expect to lose.
So first, calculate the Stop Loss distance, see how much you can trade with, what will be the lot, and fit it in your Forex account management.
