In this episode of Truth About FX, Walter digs into micro trading, risk management, and how to avoid intra-day trading. According to him, finding the right broker is the first step to finding the right system. Is your broker giving you some flexibility with your account?

You will also find here the best place to find the perfect broker for you.

Download (Duration: 05:04 / 5.79 MB)

In This Episode:

00:51 – strike rates

02:12 – too much or too little

03:38 – a big difference

04:20 – not limited

Tweetables:

Decide whether risk too much or too little [Click To Tweet].

Remember: risk management is the key.  [Click To Tweet].

Choose a broker that will allow you to take really small positions.  [Click To Tweet].

Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.

Hugh: Hi, Walter. Another listener wrote in and they’re saying that they’re reading the 15 to 240 minute forex charts with Elliott Wave and they are trying to improve their win rate.I guess is what they are trying to say here. They have small accounts and they want to know how to avoid intraday trading and not watch in the market so much.

Walter: So, this trader is using Elliott Wave which is, that’s cool or whatever works for you and the strike rates are going well. So, high win rate, that’s excellent. You don’t have a lot of money to trade? Well, here is the thing that I think because this is a good question because this person is aware that it might not be a good idea to get sucked into the lower timeframe charts.

So, here is what I would have to say about this. Maybe what you want to do here is you simply want to go ahead and change brokers to a broker that will allow you to take really  small positions.

There are brokers that will allow you to change your lot sizes so that you can trade at 3 cents a pip, or 13 cents a pip, or 43 cents a pip, or whatever it is instead of having a trade for a dollar or $10 a pip. This is something that people forget that they feel like they’re stuck, that they have to trade micro lot — sorry, mini — lot at a dollar a pip or sell a lot at $10 a pip.

There are micro lots that are $10 a pip but even beyond that, there are brokers that will allow you to trade 2 and a half cent a pip or whatever. These are the sorts of brokers you need to look for because, otherwise, you are going to make it a really poor risk management mistake.

Which means that you can have a great system that falls apart because you are running to a massive drawdown because your position size is too big. Even worse, you could have that situation where you have to decide whether risk too much or too little on every single trade.

You might get unlucky. You risk too little on the winners and too much on the losers. These sort of things people don’t think about but the risk management is really — I don’t think you can really over-state that risk management and the psychology behind it is probably the fastest path to your tra...