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Conservative lot size?

Discussion in 'Beginners Bootcamp' started by Johnny2pips, Nov 16, 2010.

  1. Johnny2pips

    Johnny2pips Sergeant

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    What lot size should my "Conservative FX Manager" use on a $10K account. He does about 8% pm with about 10 to 15 trades pm.
    He has just started trading my account with 1.4 lots and lost like in big time within minutes.
    I normally use 0.2 lots in my own trading account of $10K.
     
  2. Chaz McHan

    Chaz McHan Corporal

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    pm = per month?
     
  3. Johnny2pips

    Johnny2pips Sergeant

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    Correct. Per Month.
     
  4. Chaz McHan

    Chaz McHan Corporal

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    What lot size should my "Conservative FX Manager" use on a $10K account. He does about 8% pm with about 10 to 15 trades pm.

    IF I make the assumption that this is what he always does:

    This is less than 1 trade per day... on the low side, less than 1 trade every 2 days. If he's gonna be trading like this, then I would suggest his PIP target should be higher (if he's targeting and achieving 8% monthly), and therefore his lot sizes should be much smaller. Does he trade for an hour every other day, then call it quits? I don't endorse this "method" for lots of reasons. If so, he's working less often for less time and tries to make up for his off time with super aggressive trading. This can only end in disaster, eventually. My take on it is that he should do one of the following:

    1. At MOST he should be trading 1 lot trade sizes (100k lots, one open at any given time) with tight stop losses and very modest take profit targets. If he does this, then he should commit to more time and open and close many more high-probability trades per day. Even with this strategy, I prefer to use smaller contract sizes and leave open the option of price-cost averaging strategy if the market starts to go against me but indicators hold.

    2. If he's gonna let the trades run for a day or more, which it seems you are saying he does, then his lot sizes should be MUCH smaller... like 0.1 - 0.5, and his pip target needs to be larger, too.

    How much was lost?

    To be honest, I feel a little uncomfortable evaluating another trader on such little information. Let's just say that I am offering general principals from my own experience and within my own methodology and criticizing a hypothetical alternative.
     
  5. Pharaoh

    Pharaoh Colonel

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    Lot size alone isn't the key. Look at the percent of your account that would be wiped out if all open trades went straight to stoploss with no warning.

    Unless you are trading ultra low leverage and extremely long term, avoid any trading method or account manager that doesn't use hard stops. If there is a worry about the broker stop hunting, keep the hard stops 1.5-3 times as far out as your soft stops. This will save your account if you step away from the computer for a moment and Bernake or some other major financial person does something wildly strange and unpredictable in that moment.
     
  6. Chaz McHan

    Chaz McHan Corporal

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    Yeah, Pharaoh, that what I was saying...

    If the margin exposure is going to be so high, then the stops have to be very tight. This method of intraday trading is legitimate, but requires more than 1 trade a day for a 8% consistent return, otherwise too much is riding on over-exposed individual trades.

    If there are only 5-15 trades per month, ostensibly a medium-term hold strategy, then the lot sizes should be a fraction of what Johnny2Pips described his trader was doing.

    I tried to be more comprehensive to this situation, despite working with very little information... but you said it succinctly.
     
  7. Johnny2pips

    Johnny2pips Sergeant

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    They lost $392.00 in about 1 Hr with 1.43 lots on a $10k account. Their first trade.
    I emailed them as to why such a large lot and their reply was that they use a very tight stop loss.
     
  8. Johnny2pips

    Johnny2pips Sergeant

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    Turbo charged trader.

    Our Account Statements .

    I am looking for a new trader. Check out the above link. Geeze man, these guys are turbo charged and all. Will this be a sure to crash?
    I posted this somewhere before but it seems to have been nicked like in "Stolen"
    Cannot find it. This website is too big and all. Any feedback on these geeks?
     
  9. Anthony Kannampuzha

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    This site is not having a proper address or phone be very careful with such sites.
     
  10. Chaz McHan

    Chaz McHan Corporal

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    I have to say that their explanation sounds reasonable to me. I only glanced at the statements and nothing jumped out at me. A 4% loss in one hour seems high if one were to extrapolate to a larger period, but as an isolated incident, it's not very egregious. There will be these kinds of hours or even days sometimes, and hours when that much is banked, too. Like I said, I trade smaller lot sizes per 10k, and a lot more trades per day, but it is legitimate for them to trade fewer larger ones with tight stops. Did it stop at $392? Is this trading style within their published methodology? How long have you traded with them? Have they been satisfactory to you up to now?
     

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