First,
Thank you Dial for all your posts. They are very helpfull. In your last post in the MM sticky you said
If I have a $1000 micro account and risk 2% on every trade with a 40 pip SL You would be trading 5 lots with a 5:1 true leverage. Now since you round down position sizes you will not be able to trade 6 lots untill your account balances reaches $1200
with each pip = $0.10 on a micro account you will need to make 2000 pips before your account balance reaches $1200. That would be quite a lot of winning trades.
My question is, isnt this situation simillar to the one you described when using a mini account? Then how is a using a micro account better if you cant risk 2% on every trade without screwing up your MM? From reading stuff on FF I thought getting a micro account would eliminate the problems of asymetrical leverage.
Thanks for all your help.
Thank you Dial for all your posts. They are very helpfull. In your last post in the MM sticky you said
QuoteDislikedStop here and think a minute... we had to trade two contracts since the account was at 3500.00. At first we were risking almost exactly 2 percent of our equity. 3500 * .02 = 70.00. Two contracts (or a 20,000 position size) risking 35 pips is exactly two percent of our account working for us on each trade at that account level. However as we chalk up winners we cannot increase our position size until we earn another 1800.00. Each time our equity grows our ability to increase our risk (and our position size) does not -- until we have pocketed that 1800.00 in our winnings.
Our leverage decreases as our account increases up until the point where we can increase our position size by another 1800.00 in the example shown. At this point our leverage increases again to 2 percent but again as our account increases our leverage decreases. Many people have been able to grasp this point of asymetrical leverage and explain it but what is missing in most cases is the impact on our trading system and our account growth. I'll try to explain it in some more detail below for those who do not yet see the full implications.
If I have a $1000 micro account and risk 2% on every trade with a 40 pip SL You would be trading 5 lots with a 5:1 true leverage. Now since you round down position sizes you will not be able to trade 6 lots untill your account balances reaches $1200
with each pip = $0.10 on a micro account you will need to make 2000 pips before your account balance reaches $1200. That would be quite a lot of winning trades.
My question is, isnt this situation simillar to the one you described when using a mini account? Then how is a using a micro account better if you cant risk 2% on every trade without screwing up your MM? From reading stuff on FF I thought getting a micro account would eliminate the problems of asymetrical leverage.
Thanks for all your help.