When Trading Forex, Account Size does not Matter

Podcast: When Trading Forex, Account Size does not Matter   In This Video: 00:54 A Popular Misconception with Account Sizes 02:34 An Amazingly Versatile Calculator 03:48 Why the Lot Calculator Makes a Difference Did you know that if you wish to trade the longer time frame charts, you don’t need to have a large account size in order to do that? So let’s talk about that and more, right now! G’day Forex traders, it’s Andrew Mitchem here, I’m the Forex Trading Coach, and today it’s Friday, the 20th of February and I want to read out an email that I’ve had here from Taminash, who’s written to me and said: “You’ve mentioned that you risk about half of one percent on your account when taking most of your trades and trades are between one and a half and about three risk-to-reward return. So, my question is how big a size account do I need to start trading Forex if I wish to make a living out of it. One trade you showed has a stop-loss of 62 pips, which means the account size should be about a $120,000 if you are risking half or one percent on your account.” - That’s the email! A Popular Misconception with Account Sizes That’s actually incorrect! You see a lot of people have the perception or the thought that you need to have large bank account size because you’re trading longer time frame charts that have bigger pips, as stop losses. And it’s completely false and unfortunately, when people start thinking about the number of pips that they’re making or the number of pips they’re risking, they think that I can’t risk 62, as in that example on the email, or 162 because it means that if I get stopped out, I’m going to lose too big a percentage on my account. It’s just something that’s just, you need to change your thinking and your mindset and understanding of money management or risk in order to completely change around what most people tell you on the Internet because chasing pips and trading for pips, to me, just isn’t the way to go! Using my Lot Calculator to Help Plan Trades So, if you think of it this way, well first of all, make sure you get my Lot Size Calculator – it’s freely available on my website – just get yourself a copy and it will help explain and all the information I’m about to share. Plus, it will allow you to trade really easily and accurately. So, the way that I like to trade is regardless of the currency pair that I am trading, regardless of the direction, regardless of the time-frame of the charts, and regardless of the pips, as in the stop-loss amount, every trade has equal risk. So, for me it’s half of one percent – for you it might be one percent or a quarter or whatever it might be – whatever suits you as a risk tolerance, ensure that every trade has the same risk. So how do you go about doing that because I can already see and think of a lot of people saying, “How do I do that?” An Amazingly Versatile Calculator Well, all you need to do is you change the position size, the lot size, that you place on a trade according to the trade that you’re taking, and its stop-loss and its currency pair. So, there is a mathematical equation in order to do that but the Lot Size Calculator that I have freely available for you to use and download, does that all for you! It recognizes the denomination of your accounts, whether you are trading in US Dollars (USD) or British Pounds (GBP) or New Zealand Dollars (NZD), whatever it is. It notes the account size that you have on your balance at the time. It knows the chart that you are trading because you are dragging a script, an MT4 script onto a chart so it knows the payout that you get paid per pip for that particular pair, because of course all pairs vary, and you then enter the risk tolerance,