A Trade A Day

I have a love/hate relationship with the Forex “market”. I had always wanted to give forex a try, so about a year ago, I opened an account with Oanda.com, now fxtrade.com. The account size was very small, $300. I’ve been trying to see past the hype for a better part of a year, but in all honesty. I’ve only made one trade.

The trade worked out well in that it made money, but one trade does not a system or career make. So I’m still in the evaluation stage. I know that forex markets are supposed to trend well and the leverage is nice. But I think there could be something useful here that doesn’t get any hype. Allow me to explain.

With fxtrade.com, you can size your trades. What I mean by this is you can adjust the “lot size”. You don’t have a specific size to the contract, so you can control how much you risk.

For traders that would be under-capitalized in other markets, this is a great feature. You get to feel the pain without killing your account. For the person who wants to learn how to trade. More specifically, how to manage their emotions when there’s money at risk, I don’t think there’s a better way. Let me give you a specific example:

My fxtrade account currently sits around 1K(No, I didn’t make it all from that one trade, I added some to it). According to my trading rules, I only risk 1% to 2% of my trading stake on any one trade. 1% of 1K is $10. Now, you may be thinking “big deal, $10 bucks is nothing”. That’s my point exactly. You can size your trades to the point you emotionally can handle the loss.

I do the same thing with stocks, but the drawdowns and account minimums can be a hurdle to some would be traders. And Futures? Forget about it. The only way I can size those bad boys is with more capital.

I’m not completely sold on Forex. I think there is too much hype about profit potential and leverage, and the cost of entry is so low that many people lose their meager trading stake because they don’t take it seriously.

If you’re interested in trading, willing to take it seriously and don’t have a lot of cash, I think it’s a good way to get started.

BTW, I know we’ve all grown accustom to reading disclaimers about risk and loss. It does bear repeating, but I’ll take the legalese out of it:

Trading is a losing game. Odds are, you will lose all your money and maybe more. The same goes for forex. Even though you can open a forex account for $250.00 doesn’t mean you should. If someone says only invest/trade money you can afford to lose then they are delusional. Who has money they can afford to lose?

Oh and I am not an affiliate of fxtrade. Fxtrade has no affiliate program, I should know, I looked. I use it. I like that you can size your trades. There are other forex brokers I could have “featured”, but I think if you’re going to go the forex route, especially with a small account, you should be able to manage your risk.

If you like this post, then consider subscribing to my full feed RSS feed. You can also Subscribe to A Trade A Day by Email and have new posts sent directly to your inbox.

3 Comments »