Martingale Mania VI ~ Capital Outlay

Filed Under (EA System, Journal) by Casey on 26-08-2009

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While I continued my back testing on a few more currency pair, I was planning my next course of action to this Martingale strategy. Since I believe I got the currency pair covered… ok… more or less got the currency pair covered, I also needed to address the main issue to continue with this strategy forward.

Capital outlay with the big C

Looking back at the nature of the risk I am willing to take with this strategy… for each currency pair, I need to have at least $10k… risking around 3,500 every time… would equal to 35% of my capital. This would of course be reduced every time I successfully accumulate my profits and grow my capital and continuous maintained my lot size to be at 0.01.

Thus… this is where I am stuck!

I do not have $10k with me at the moment. So what am I going to do? $hit!

However having said that… there is always a way around it. If I were to change $10k into 10k cent… it would make sense to trade 10k sense… going on a 0.01.

This was where I got my bearing on all this lot size in relation to my capital outlay way off… if I were to trade $10,000.00 @ 0.01 lot trade meaning I am trading 1 micro lot, with 10,000 cent I need to trade at 0.0001 lot.

Where the heck can I find a broker who would offer 0.0001 lot?!

Even nano broker would allow or offer to 0.001 of a standard lot… So the minimum I need would be 1,000 trading at 0.001

Let me see if I get the metrics correct for this Martingale system to work

1 standard lot = $100,000 unit currency = $1,000,000 capital
0.1 standard lot = 1 mini lot = $10,000 unit currency = $100,000 capital
0.01 standard lot = 1 micro lot =$1,000 unit currency = $10,000 capital
0.001 standard lot = 1 nano lot = $100 unit currency = $1,000 capital

So now… I don’t have $10k.. which mean I need to take the next level down… which is to trade 1 nano lot with a $1k capital outlay…

The next questions is which broker offers nano lot? I scour around the internet to see if there are any broker who would offer nano lots. And I came across 3 broker… IBFX, FXOpen and LiteForex. Now I have accounts with all three of these broker so it should be easy to get going…

Firstly, while IBFX seems to be the most reputable amongst the three, they however are together with NFA, so they do not allow hedging on their platform. So this sucks big time, because the EA I am planning to used and base on my backtesting settings require me to hedge. So IBFX is out…

Secondly, FXOpen seems to be a reputable amongst my countrymen. FXOpen even have a operating office in Malaysia… so which give me somewhat some confidences.

Thirdly, Liteforex is from Russia, while it seems to try to build a reputation, somehow or rather there seems to be a stigma against them… I don’t know why but it seems to be. LiteForex seems to be trying to build a better public relations and trying to build their reputation and what other way to do it than be active in ForexPeaceArmy forum. Nevertheless, the stigma still persist within me…

So if you ask me between LiteForex and FXOpen… I guess FXOpen gets more money from me… :)

La di da… I got my strategy and I got my broker… now I have go get some money…

Hopefully I start getting this up and running by early next month, after I am satisfied with my backtesting results.

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