Lesson 5 - Position sizing | Forex
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Position Sizing and Stops in the Forex Position sizing is the process of determining how much to invest, or risk, in any single trade. Position sizing is different for active trading, versus longer-term investing. In the case of short-term trading, it is usually a function of how much you could lose if the trade went bad. In longer-term investing strategies, position sizing is a bit more complicated and may depend on the strategy at play. In this section, we will focus on sizing positions for short-term trades.
Comments
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All these presentation videos regarding Forex are very informative and helpful to me. Thank you.
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I'll have to find out how a lot is determined. I'm starting a mini account with FXCM. You can start the mini account with $50.00 dollars.
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Thnaks for the Risk equation. It appears a person could greatly minimize risk by strictly following such an equation.
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You can tell that the average person doesn't know what the fuck is going on by the lack of answers to the questions in the comments section. LOL
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I don't understand why the formula equals 4 mini lots. If a mini lot is 1.000 units, why does 2% of your account size ($200) divided by the Stop Loss ($50) equal 4 mini lots (4,000) ?
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Currency pairs are usually traded in units of 100,000 (standard lots), 10,000 unit (mini lots) or 1,000 (micro lots)
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Isn't the pip value an important factor to take in consideration when using this formula ?
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A lot? Or a "Lot". A "Lot" in the forex market is the smallest available trade size that you can place. A micro lot is the smallest ranging from 1K-10K and a Standard lot size ranges from 10K-100K.
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i still need to know how much is a lot !!
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