Minimum account balance - and why it matters.

This explains the recommended minimum account balances for our EAs.

Micro accounts can trade with much smaller account balances than Mini Acconts.
The minimum account balance recommended for a MICRO account (where the minimum lot size is 0.01 lots) is:
- For the Combo Pack, $750, (better if close to $1000.)
- For the Master Scalper alone, $500.
- For the Breakout Hunter alone, $250.
Your broker's account should allow "micro" lots trading (0.01).

For mini-accounts, where the minimum lot size is 0.1 lots, the smallest recommended balance is much higher than for micro-accounts, that allow 0.01 lots.
The main concern is that you need to be able to open multiple lots on the pairs if you are going to use the Combo pack, to balance the Breakout Hunter in sync with the Scalping pairs, since the SL is much larger, and you do not want a SL in the BH to consume the profits of the MS on a bad day.
If you trade the Master Scalper alone, this is less of an issue, and you can trade flat lots across the board.
To use a MINI account, you need $3000 minimum for MS alone, so SL will not exceed 3% of the balance, trading minimum lots.
BH can work with $1000 when trading alone, and will still keep losses within acceptable percentages of the account.
For the Combo Pack you need 10k to trade a Mini Account, or the BH will be too heavy on the MS pairs.
It is a mistake to open a Mini-Lots account in order to get the better spreads, if you are not going to fund it adequately. You are far better off using a Micro account.

Regarding leverage
Our Money Manager is optimized to trade between 50:1 (max in the US) and 100:1.
When you trade with larger leverage, you expose your account to Margin Calls.
The way it works is that the first few orders will be of the same size, but as more orders come in, you can get in trouble. 

When we trade many pairs simultaneously and our Money Manager uses a percentage of the Free Margin of the account to determine lot sizes. Every time an order opens, it uses some of that available Margin and the Free Margin is reduced. The more orders you have going at one time, the less Free Margin you have, and consequently the MM starts opening progressively smaller positions. 

If your Leverage is too high, it will allow the MM to continue trading at the higher lot size. 

If at a time when you have many positions opened the market reverses for a while, you could get you into the situation in which you have exhausted your Free Margin. This authorizes the broker to issue a Margin Call. Not nice...

"Margin Call" is an excellent movie, highly recommended. Loved it!

But having a Margin Call in your trading account hurts. Been there, done that.

Much better to call the broker and reset your account to a 100:1 leverage, and sleep well knowing that when you wake up it will be a few dollars up or down, but never have been liquidated for trading at a high leverage.

Never completely trust a robot?

The other day I came across an article with the above title. After reading it I thought that, beside the catchy title, what was really the appeal of the question?

I think it harks back to the deep set fear we have, that automation may be our ultimate doom - a la I-Robot or the Terminator.
I think it needs to be said loud and clear - "You are your Forex account's biggest enemy."
Compared to what the average greedy Forex trader is capable of in just "one adrenaline - caffeine induced trading rush" - even the most grave programming error of an expert advisor is a walk in the park.
I give you a real example of just last week: We had a client who was happy with the overall trading performance of one of the robots we developed, but had a couple of loss entries that he didn't understand. He wanted some clarification and sent us his account history. I don't know if you can imagine our bewilderment when we realized that this fellow had been trading at all the wrong hours. The robot's schedule was 180ª reversed - since he had not synched his account settings with his trading charts. Yet he had been writing up some beautiful profitable weeks!  We set him straight and the problem was solved with two clicks of a mouse, but - talk about trading without supervision.

I have said it before and will say it again - human emotions and human error caused by fear and greed are the number 1 enemy of you account.
If you have robot-trusting issues - this is what I recommend:

1. Do your research: buy a great forex robot from people who care and offer training and support. Make sure it has automatic money management controls and is specifically designed for the currencies you wish to trade.
2. Install your robot - check in once a day or once every other day to make sure it works fine - and let them do what they do best!

If you want more involvement read about our no trade days - but don't try to outguess the market it is a sure kiss of death for your accounts!
Other than that - trust your robots - they are not emotionally compromised...

Improper Money Management - the reason most forex traders fail!

Forex Money Management is at the heart of any successful investment enterprise. If you ask any Forex expert about what makes a successful Forex Strategy and "Money Management" does not come up in his first three points  I would say that person is probably not an expert and his advise may not be worth listening to.
Money Management is what separates the professional trading approach from the amateur and not coincidentally is the very reason 90% of first time traders wipe out their first trading account.

Why is Money Management so detrimental? It means you have to abandon hunches at all times, be aware what your stop losses would do to your account, you HAVE to take losses and cannot afford to extend stop losses to avoid them and lots more somewhat unpleasant but responsible trading behaviors. Money Management is your constant reality check and most people would rather day dream while day trading.

Why is money management so important for long term trading success?


Amount of Equity                         Amount of Return Necessary to Restore
       Lost

         25%                                               33%
         50%                                             100%
         75%                                             400%
         90%                                            1,000%

So, that means that a trader would have to have a 100% return on his money just to recoup a 50% wipe out of his account.
Very few active traders are able to pull this off - I am sure that these traders use wise money management in the first place!

Stop hoping for the big one - the one trade that will make you rich! It doesn't exist - and while trying you will expose your capital to enormous losses that will be ever harder to overcome.

Start thinking in terms of steady growth with predetermined risk. Put your account on autopilot with good days that are realistic and bad days that are not catastrophic.

They only way to accomplish this is Forex automated trading with automatic money management.

Forex as a Retirement Investment?

Forex is usually not the first thing that comes to mind when the topic "Retirement Planning" comes up. Why? Because Forex still has the stigma of "no-holds gambling away - crazy trading" with risk that is uncontrollable and a chance to lose all the money at any moment. But is this perception deserved and even true?

I think we are still in what will be considered "Forex infancy" in years to come. Let's not forget that stock investing was considered risky and not a safe choice by those promoting real estate as the only safe investment choice just a few decades ago.
Trading always is only as good as the strategy behind it. There will always be traders who trade "by the seat of their pants" - in Forex right now they are still the majority - but soon they will be weeded out by the natural selection of trading - they will simply run out of funds.

When you have a sound Forex trading strategy and a system to implement it - preferably an automated Forex trading system to rule out human error and emotion - profits will follow - in all trading setups - Forex just being another investment venue. The advantage that Forex has over other investments is leverage - you can with little money  control large capital - that leads to faster paced growth but does not mean we have to deal with larger risk.

How to control risk in Forex:

1. You leave trading to a Forex automated system - no mistakes - 100% execution of your Forex trading strategy
2. You use a robot with automated money management and you trade with low risk. Your account will grow slowly and steadily - and on its own
3. You apply common sense - you avoid insanely risky days  - no-trade days - you read the news and observe the market behavior - ideally your robot uses volatlity filters to rule out much of the insanity on its own.