Account size
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Thread: Account size

  1. #1
    Hi,

    Nevertheless too often I hear people say that you want a significant account size in order to become profitable, or put differently, that it is a lot easier to make money with a thousand dollar account than with a thousand dollar account.

    I'd love to ask anybody who ever put forward a statement like this to explain himself, so that we can have a discussion on the validity of this statement.

    Thank you.

  2. #2
    Quote Originally Posted by ;
    Hi,

    Still too often I hear people say that you want a big account dimensions in order to become profitable, or put otherwise, it is a lot easier to make money with a thousand dollar account than with a million dollar account.

    I'd like to ask anybody who ever put forward a statement for this to clarify himself, so we may have a discussion on the legitimacy of such a statement.

    Thank you.
    Having a 5 mil account certainly get's you access to top liquidity suppliers, such as Hotspot or Integral. You can certainly do HFT there. But it makes it harder, since you'll begin impacting the market longer. A recent report said that the typical forex trade deal size dropped from 3 mil to 1 mil this year. That is only 10 times bigger than what a lot of retail traders use.

    And another thing, there is a saying: large money didn't get big by being stupid. Put another way, if you've got a big account, it is considerably more probable you know what you're doing, so your also more likely not to use 100:1 leverage or to feel that hedging actually hedges anything.

  3. #3
    Because that statement is totally untrue you won't find many answers. Any account dimensions can generate income. It's a matter of levels where folks differ. 50% or 12 annually it doesn't matter. . .it makes cash.

    Where this dialog becomes contested is HOW much money it could make as a base line. . .not as a percentage. Clearly the exact same percent is vastly different at the bottom line. 12% of 1,000 is $120. 12% of $100,000 is $12,000. Big difference but the exact same percent.

    You goal will determine the way you capitalize your account. Most recommend starting small and increase as you proceed. This enables you to create your mistakes rather than lose much. . .when you become consistent movement up to higher and higher capitalization. All the while you are currently earning money. . .the real question (one you didn't put forth) is how far?

  4. #4
    Quote Originally Posted by ;
    so your also prone to not use 100:1 leverage.
    So d'ya guess that if I wuz to put $1 million in each of 2 different accounts, one using 50:1 leverage and the other with 100:1 and fix my lot size and prevent loss and these and risk 2% on one trade in each account, which account do not reckon I'd shed more on if'n I got stopped outside in both transactions. I wuz wonderin.

  5. #5
    Quote Originally Posted by ;
    so d'ya guess that if I wuz to place $1 million in each of two different accounts, one with 50:1 leverage and another with 100:1 and fix my lot size and prevent loss and such and risk 2% over one trade in each account, which account do ya reckon I'd shed more on whether'n I got stopped out in both transactions. I wuz just wonderin.
    2% risk is where you place the stop. It is not necessarily where it'll be executed. Ever heard of gaps?

    http://en.wikipedia.org/wiki/Liquidity_risk

  6. #6
    Quote Originally Posted by ;
    2% risk is where you put the stop. It's not where it'll be implemented. Ever heard of openings?

    http://en.wikipedia.org/wiki/Liquidity_risk
    yes'sir.... I have heard of these things they call gaps but I wish you would kind'a x'plain what has to do with larger or diminished leverage... whut I am sayin is that acount would I lose more money in???

  7. #7
    Quote Originally Posted by ;
    yes'sir.... I've heard of these things they call interruptions but I wish you would sort'a x'plain what has to do with bigger or lesser leverage... whut I am sayin is that acount would I lose additional money in???
    Read my article. I said USING 100:1, not needing 100:1 leverage.

    1 mil acc, 100:1 leverage I open a 100 mil position
    1 mil acc, 50:1 leverage I open a 50 mil position

    Guess where you will lose more?

    In case you don't go above 50:1 real leverage, both accounts are identical.

    If you believe you have more head room in the 100:1 account, guess what, it is the exact situation I described above. The first account has 50 mil headroom, the 100 mil.

  8. #8
    Quote Originally Posted by ;
    Read my article. I said USING 100:1, not having 100:1 leverage.

    1 mil acc, 100:1 leverage I open a 100 mil position
    1 mil acc, 50:1 leverage that I open a 50 mil place

    Guess where you'll lose more?

    In case you don't go above 50:1 real leverage, the two accounts are equal.

    If you believe that you have more head room in the 100:1 account, guess what, it is the specific situation I described above. The first account has 50 mil headroom.
    Well sir that beach is somethun to think about but I wuz type'that a sayin' that should I wuz to risk 2% of my account on either account.... On which account might I lose money if things only all form'a visit hell??? I mean I know I can open a way larger place with way larger leverage but whut if I only risked 2% of either account??? So you guess I would lose more with that high leverage stuff????

  9. #9
    Quote Originally Posted by ;
    Read my article. I said USING 100:1, not having 100:1 leverage.

    1 mil acc, 100:1 leverage I open a 100 mil position
    1 mil acc, 50:1 leverage I open a 50 mil place

    Guess where you'll lose more?

    In case you don't go above 50:1 real leverage, the two accounts are equal.

    If you think you have more head room in the 100:1 account, guess what, it's the precise situation I described above. The primary account has 50 mil headroom, the 100 mil.
    I guess u'r still studying about that for a bit. Seems like the CFTC or the US Gov or almost none (except those to whom the answer is apparent ) can answer this question. Regardless of.... Adal andy'all think on it a while cuz I really need some input. Obtained'ta go for now, thanky'all

  10. #10
    Quote Originally Posted by ;
    well-intentioned that shore is somethun to think about but I wuz kind'a sayin' that if I wuz to risk 2% of the account on each account.... On which account might I lose money if things'a visit hell??? I mean I know I can start position with way leverage but whut if I only risked 2 percent of account??? So you reckon I would shed more with all that high leverage things????
    Ah, Slim Pickens returned.

    Are you sure you can find a broker who will provide you 100:1 on a million. If you can:

    Are both trades going to have equivalent lot stops and sizes? I understand the risk is going to be the same and leverage amount will result in a 20k reduction. 2 percent of a million has to be 2 percent of a million (or 20k) in either case but the transactions will not carry out the same if you are utilizing the full allowable amount of each leverage. In case you have a million leveraged at 100:1 it will provide you double the position dimensions. Every pip will be worth twice as much offering. But because of the larger position-size/pip-value. Your cease will get hit twice as fast.

    1mil @ 50:1 = 50 mil = $500 per pip
    2 percent SL = 20k
    40 pips til SL

    1m @ 100:1 = 100mil = $1000 per pip
    2 percent SL = 20k
    20 pips til SL

    If I understand your purpose, you are speaking about trading equivalent lot size, state 10 regular lots, and equivalent stops and not trading the complete amount the account will allow. All things stay the same, such as space to stoploss if that is the case

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