Good thing too, because after that trade I took a deep breath and waited for the next opportunity. It didn't take long and the rest of the week was really incredible. In the end I had a very positive week:
Beginning Balance: $2153
Ending Balance: $2800
Weekly Gain/Loss: $ 647
Avg Pips: 162
I need to interject at this point for full disclosure, that I am also trading the Australian dollar (AUD/USD) pair as well as the Euro (EUR/USD). What is great about the Aussie is that it trades for near "par" value of the US dollar.
Why is that so special? I trade on a 50:1 leverage rate, so for every $1 I have in my account I can buy $50 worth of currency. This allows me to trade with "mini contracts" in amounts of 10,000 units of currency. So in the case of Aussie, it works out like this, example: 10,000 x 1.03 (approx. exchange rate to the US dollar) = $10,300 that is divided by the leverage rate, 50 which equals $206. This is the amount of actual cash I need in my account to purchase one contract of AUD/USD. My rule of thumb is to have about twice the value of contract in my account to trade one contract, so this would be about $400.
In the case of EUR/USD, a contract costs about $260 so I would need $500 in my account to but one contract of Euro. So with an account balance of $2000 I would limit myself to 4 contracts of EUR/USD or 5 contracts of AUD/USD. When trading mini contracts, a 1 pip move equals $1 to my account at 50:1 leverage, so if I buy 4 contracts of Euro and collect 10 pips then I made $40, if I buy 5 contracts of Aussie and collect those same 10 pips then I made $50 for the same amount of pips.
Of course the opposite of this is that I could lose more trading Aussie if the trade goes against me. So be careful and watch your risk tolerance.
