Evidently, the more the investment capital, the easier, safer, more flexible and more effective should be its management. The investment and financial means of traders differ. It is a common situation when somebody willing to participate in speculative trading in a currency market simply does not have enough funds to open an account corresponding to the required safety rules. Each trader has his or her own security level, but I think (although it is a debatable issue) that the operable account size for the individual speculative trader begins with a minimal amount of $30,000, assuming that the initial margin is 2 percent and the minimal contract size is $100,000. I think $30,000 is the required minimum amount corresponding to FOREX market conditions, considering the following:
• If trading a single minimal contract of $100,000, a trader loses a pip amount equal to an average daily swing corresponding to $600 to $1,000 (depending on the selected currency pair), then the loss of 2 to 3 percent of the account per single transaction is rather painless. This loss cannot ruin the account, even in the case of a few consecutive losses.
• Traders must consider that the market “noise” amplitude approximates the amplitude of the average daily exchange rate fluctuation. Therefore, setting shorter stops while trading on a medium or longer term is unreasonable, because these stops can be offset by incidental
oscillation ticks.
• Some trading strategies recommended in this course suggest position reversal and doubling the contract size at the same time, which demands some additional margin for the safety of the corresponding working capital.
• Traders should take into consideration that the trader’s job should be adequately reimbursed, including psychological stress, time, and effort spent. There is no reason to spend up to 14 to 16 hours per day trading if you can earn the same money in a less stressful job. Simple calculation shows that even doubling of trading capital in one year can provide you with a secure income, but only in the case of an adequate initial investment.
• If trading a single minimal contract of $100,000, a trader loses a pip amount equal to an average daily swing corresponding to $600 to $1,000 (depending on the selected currency pair), then the loss of 2 to 3 percent of the account per single transaction is rather painless. This loss cannot ruin the account, even in the case of a few consecutive losses.
• Traders must consider that the market “noise” amplitude approximates the amplitude of the average daily exchange rate fluctuation. Therefore, setting shorter stops while trading on a medium or longer term is unreasonable, because these stops can be offset by incidental
oscillation ticks.
• Some trading strategies recommended in this course suggest position reversal and doubling the contract size at the same time, which demands some additional margin for the safety of the corresponding working capital.
• Traders should take into consideration that the trader’s job should be adequately reimbursed, including psychological stress, time, and effort spent. There is no reason to spend up to 14 to 16 hours per day trading if you can earn the same money in a less stressful job. Simple calculation shows that even doubling of trading capital in one year can provide you with a secure income, but only in the case of an adequate initial investment.
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