LEVEL 1: THE $5000 FIRST-100-TRADE CHALLENGE

In beginning to trade forex, the account size should not be less than $5000. At $5000,
one has the ability to put on trades and strategies that can be used in any size account.
In a $5000 account, one should put on a standard lot amount ($100,000) only when they
recognize a very high probability setup. A 20-pip loss in such a trade would represent a
$200 decline, which is a 4 percent decline. In the early stages of trading experience, a
sequence of losses with big lots could wipe out the account.
The best approach for a $5000 account size is to trade at $1 per pip and the most $2
per pip. This means placing $10,000 trades and $20,000 trades. The objective at this stage
is to achieve a measure of competence, not a measure of profitability.
A $5000 account size should be viewed as a training account to get one into shape for
the marathon of forex trading. With that view in mind, there are warm-up exercises and
strategies to test out for your first 100 trades. Each strategy should apply to a sequence of 10 trades to allow for a reasonable ability to quantify performance and learn from that
analysis. Think of the trading as a series of challenges:
1. Select one currency pair to start your trade.
2. Set a goal to achieve an average pip win of 10 pips for your first 25 trades.
3. For your next series of 25 trades, set an average pip win of 15 pips.
4. For the third and fourth sequence of 25 trades each, select a different currency pair
with the same profit targets of 10 pips and then 15 pips.
5. Set a risk per day of 4 percent of equity ($200) to allow for the expectation of being
frequently wrong during your first 100 trades.
6. Don’t do any trades using less than 5-minute candles.




By Abe Cofnas