Understanding the lot size in Forex market
December 26, 2017 at 11:03 am #290
Traders in Forex need to know what lot size is. When you are trading in Forex, you may not know many things. It is normal for traders as they are only busy with making their profits and buy mansions, houses, and nice cares. Trading in Forex is not that easy that you can make your fortune in a day. You need to spend a lot of time in this market, you need to grow your account and only then you can have the chance to make the money that you have always dreamt of. Most traders only know the basic things in Forex like they have to develop their strategy to make profits, they have to trade the market with their own analysis, they cannot depend on the automated software for trading and they need to use leverage when they are professional. They have a big ignorance in the lot size of Forex. Lot size is very important for you. Each time you are placing your trades in Forex, you have to set your lot size. It is the size of your risks and also your profit that you set when you set your lot size. This article will tell you the importance of setting the right lot size for your account.
What is lot size?
A lot size refers to the amount of trade size that you can trade within the Forex market. If you are buying burgers for your shops and you want to buy a lot of burgers, the lot size of the buying amount will be the number of burgers that you can buy from them at the wholesale rate. If the lot size of their wholesale starts from 100 to 1000, you can buy any number of burgers in between them. This is the lot size in Forex, the amount of trade size that you want to trade. You can trade with 10 dollars and also with 1000 dollars, the choice is yours.
In the Forex trading industry, many traders don’t know how to calculate the lot size perfectly. But without having a precise knowledge about lot size calculation you are bound to lose a big amount of money. You money management technique is directly dependent on lot size calculations. If you risk too much then you are going to avoid the golden rules of money management.
Trading with large and small lot sizes
If you trade with a large lot size, you will be placing your trade for a big amount of money that you have risked from in Forex. If we go back to our example, if you buy 200 burgers for your small stall, you will make a loss if you cannot sell them all. If you place your lot size too small like starting with 1 dollar, you may miss the chances to make your profit. You will need a good trend in your favor to make your profit. The lot size is very important for your trading on how to make your profit. Taking too small will give you nothing, too big will take everything. Trade with a standard lot size in Forex.
Trading is all about finding the perfect balance. The term lot size is very basic and if you don’t understand it very clearly then chances are very high that you will blow your entire trading account within a few weeks. The professional Aussie traders often consider lot size calculation as the best way to minimize the risk exposure. Since most the reputed broker like Saxo offers a high leverage trading account to their clients without managing your risk efficiently you are bound to lose a big sum of money. So focus on your trading capital since this is your top priority. If you can safeguard your investment then it will be an easy task to make a profit on a regular basis. Never take any unnecessary risk while trading.January 5, 2018 at 10:16 am #292
Dear annesteven, personally, I am not equipped to answer Forex questions, as I pretty much only trade Crypto. But, I will rebroadcast your message on the thread, and perhaps one of our illustrious participants can give you a factual answer.
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