Week 2 of "Doing it LIVE!!"

    For the second week of live trading, I had a somewhat inauspicious start to the week.  I got into a short trade of EUR/USD that I really thought was going to go well but I ended up getting stopped out for a loss.  That made me real nervous to start off my second week of live trading.   But it was important to stick to the rules of engagement.

    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.