We understand that most retail traders are not familiar with trading low leverage and, for that matter, they find it difficult to trade on a BluFX funded account. Considering this situation, we have decided to provide a guide on a better approach to successfully trade on BluFX funded forex accounts.
4 Steps to Trade Profitably on a BluFX Account
To qualify for a withdrawal on any of the BluFX accounts, you need to make at least 5% profit. For the Lite account, this is $1,250 and for the Pro, this is $2,500. There is no rush in hitting this target as BluFX does not impose any time limit. If you keep your subscription active you can achieve it at your own pace.
So here are a few tips on how a trader can achieve this profit target:
1. Focus on profit in pips
Calculating profit in pips will mostly lead to hitting the target. Focus on the number of pips made in each trade instead of how much money made. How many pips would it take to hit the target for a BluFx account? For the BluFx Lite account, trading 0.5 lot size, it would require at least 250 pips. The Pro account would require at least 278 pips, trading a 0.9 lot size.
2. Focus on a few pairs
You do not have to trade every single pair; narrowing to a few pairs could be extremely helpful in your quest to achieve this target. Less is more, quality over quantity. It would be advisable to trade pairs that have high volatility. This way there is a good chance of catching more pips.
Not sure whether to withdraw or grow your account? Here are three reasons to grow your trading account>>
3. Focus on market conditions and trading strategy
Market conditions vary and therefore a good trader should have a strategy for various conditions. In a trending market, it would be possible to hold trades and just go with the flow to get as many pips as possible. Whereas in a ranging market, price movement can be choppy and oscillatory and a profitable trader in these conditions would be one who can get more pips by identifying the range extremes and trading in both directions.
4. Focus on the drawdown limit
The drawdown limit should be the basis for risk-reward calculations. Some traders make the case for high leverage by calculating their risk-reward ratio as a percentage of their account balance. For greater chances of success with a BluFX account, calculate your risk based on your maximum drawdown limit. By following this principle, you give yourself enough breathing space to avoid reaching the drawdown limit. In calculating your risk, ask yourself this question: How many trades do I have to lose before hitting my drawdown limit? The higher the number of trades, the higher your chance of staying afloat.
Putting it all together, let's look at some examples.
Trading Example 1: Joe
Trader Joe gets a BluFX Pro funded forex account which is a $50,000 book.
Trader Joe has discovered that the GBPUSD pair moves an average of 80 pips a day, so he decides to focus on this pair.
Following the BluFX position size table, he discovers that the maximum lot to be traded for GBPUSD is about 0.9 lot. Using this lot size per trade, the number of pips he would require to hit the target of $2,500 (5%) would be:
$2,500/ 90,000 (nominal value of 0.9 lot size) = 0.0278
This is 278 pips.
For a $50,000 account, the drawdown limit is $5,000 (10% of starting capital). If Trader Joe decides to risk 2% of $5,000 ($100) per trade, this would mean having a maximum loss of $100 per trade. This implies risking about 11.1 pips per trade using a 0.9 lot size. With this calculation, Trader Joe must lose 50 trades consecutively to hit the drawdown limit.
If Trader Joe trades with a risk-reward ratio of 1:3, he would be making about 33 pips per profitable trade. At this rate, after 9 trades he would have gotten 297 pips, thereby achieving the profit target of 278 pips. The money he would have made would be:
Standard lots X number of pips
90,000 (0.9 standard lots) X 0.0297 = $2673
Not sure if you’re in the right place emotionally to trade? Here’s our ultimate trading mindset checklist>>
Trading Example 2: Lily
Lily Trader gets a BluFX Lite account which is a $25,000 book.
Lily Trader has discovered that the EURUSD pair moves an average of 90 pips a day, so she decides to focus on this pair.
Following the BluFX position size table, she discovers that the maximum lot to be traded for EURUSD for her account size is about 0.48 lot. Using this lot size per trade, she would require about 260 pips to hit the target. Here’s how we arrived at that figure:
$1,250 / 48,000 (nominal value of 0.48 lot size) = 0.0260 (260 pips)
For a $25,000 account, the drawdown limit is $2,500 (10% of starting capital). If Lily Trader decides to risk 2% of $2,500 per trade, this will mean having a maximum loss of $50 per trade. For this amount, Lily Trader would risk about 10.4 pips per trade using a 0.48 lot size. Lily Trader must have 50 losing trades consecutively to hit the drawdown limit. That's not Lit.
Lily Trader uses a risk-reward ratio of 1:3, so she would be making about 33 pips per profitable trade. At this rate, after 8 trades she would have gotten 264 pips, thereby achieving the profit target of 260 pips. The money she would have made would be:
Standard lots X number of pips
48,000 (0.48 standard lots) X 0.0264 (297 pips) = $1,267
With the above examples, we can see a clear and concise path to hitting the target on a BluFX account.
Nerves holding you back? Here's how to deal with trading anxiety>>
How do I trade profitably on my BluFX account?
The best way to have a successful forex trading experience is to get everything right straight off the bat with proper preparation. The second-best way is to reevaluate your trading system, adjust, and try again. It may be only on your third or fourth attempt that your trade will move in the correct direction, but this practice requires as much patience and discipline as getting everything right the first time, and will probably teach you more in the process.
Most importantly, you need to be self-analytical and truthful with yourself, to realize when you need to work on your own shortcomings; which of the above-stated tips do you already have, and which do you need to incorporate to be successful?
Here are 5 Common BluFX Myths Debunked>>