When do you increase the lot size?

I agree with lexys,your balance size will determine how much you will risk on your next trade.

I don’t necessarily trade based off one lot size for all my trades. There are many factors that influence how large of a trade size I will take.

Quick scalps consist of my smallest lot sizes when I trade, each scalp trade lasts no more than one hour.
If I plan on holding for 2-4 hours it slightly larger than my scalp trade size.
Then 4-24 holds I increase my trade size as well.

Basically, the longer amount of time I plan on holding onto a trade, the larger my position size in that trade will be. This is because there is a more definite reason for my to hold for a longer period of time. If there wasn’t I wouldn’t be having such a large lot size. I expect the accuracy of the trade to be higher than my shorter term trades, so I am willing to risk more.

Sometimes with trades that I expect to hold for 3 or more days I may start with a small position on, then if the trade is going in my favor I may look to add to it at the best possible time (for example, a pull back etc). The longer/more days I plan on holding a trade for, the more likely I will add onto the position at times I think are best. Starting small and adding to a position that you plan on holding for a longer period of time can help protect from too large of a loss if you were dead wrong. Yet, if you were correct it could be a bit frustrating. But that’s why you should think about losses more than profits. Managing risk can be very important because even if you are more cautious you can still make more overall because you will/should have less losses to [I]set you back[/I].

Buddy, this is an easy question.

You increase your lot size (NOT THE SAME AS ALL-IN):

  1. When you know beyond the doubt that the market has gone berserk and made the biggest boo boo by being overly exhausted in its direction.

  2. When you have adequate capital to do so.

Play hard and never back down when you are holding royal flush poker hand.
In summary, CERTAINTY and CAPITLIZATION are the main factors.

May I know what money management rules you follow and what about leverage? Then I can answer more specifically.

I am not saying that the traders that expressed a different opinion are bad traders. Everyone can find a trading style that fits him the best and be profitable BUT usually lotsize and risk per trade do not have much to do with pips won or duration of the trade.

This is how to determine your lotsize:

You just choose at the beginning the risk per trade that you can afford according to your risk management which should determine what % of your equity do you want to risk with each trade. E.g.: if you want to risk 1% and you are going to open a trade with SL of XYZ pips you should open that amount of lots so if you lose you wont lose more than 1% of your equity. Nowadays most of the trading platforms have tools that will calculate this for you automatically but if yours don’t you still have the option to take the calculator and a pen and use your brain. The best case will be to do that calculation before each trade because with each lost/won trade your equity is also changing and most probably your SL will not always stay the same.

This is how to determine your risk per trade:

0,5% risk per trade is considered a reasonable risk for a medium size account. No matter how small your account is any risk >5% is considered closer to casino approach than to trading.
When you have already started and embraced by your good results you are wondering if you need to increase your risk per trade don’t listen to your internal voice but use an approach like the KELLY CRITERION. It has different variations for different situation but in general:
K%=W-((1-W)/R) Where “W” is win rate and “R” is Return. Calculated for each of your traded asset classes/instruments etc… will give you the answer where to invest more money/time/efford.
Decrease your risk per trade when you are losing. Increase your risk per trade only when winning.

If you don’t like all this calculations and mathematical methods, you can still get back to the crystal ball or counting the number of won pips during full moon :slight_smile:
I hope I have helped at least someone get out of the 95% losing traders.

Interesting question.

In practice, I would never double up on a winning position as this would be either not justified by the TA or would exceed the total % exposure compared to my account capital that I wish to have in any single forex pair. Or both.

If you use a trailing stop on your first position, and move this to break-even, then an equally sized second position with the same risk would not increase your exposure. But this wouldn’t be justified by TA so I don’t use these.

Thank you, this helped and clarified things for me :pray:t4:

Just amending my own post.

Since I was in this position with regards increasing the position size I have found it very profitable to do so, and it has led to the biggest gains which I have logged. I now see that pyramiding offers the opportunity of multiplying your gains without increasing the risk to your account capital.

But all this while I thought pyramiding is basically averaging down the entry price of the position.

The idea is that if you’re in a long position and price rises, you add to the position. So this would mean in effect averaging UP.

Its a tricky tactic…

Lot size should be maintained according to risk management. To maintain the stop loss properly, you have to maintain the lot size along with the stop loss.

On the contrary, pyramiding is adding to the position to benefit the most from the high-performing assets, that’ll maximize the returns. This is one strategy that I’ve been working on the demo account with fxview and xm and realized that it works well in the trending market. Not just this, there will be better profits without you having to increase the original risk. My live is on XM. For that, withdrawls usually just take 24 hours so that’s also realy great. Though, you should some explore brokers on your own as well before creating a live account.

I won’t give it much credit since it’s got the tendency to gap in the price from a day to the other. Let’s not deny that a large gap means a very large loss.

Not a problem. Simply avoid the markets that you think are prone to gaps in the price and ensure that the additional positions and stops guarantee you make a profit.

I think it is very important to create a trading plan by following money management.

If I have more deposits, I will be able to trade with bigger lots and make more profit. But if I want to trade without maintaining risk, it will be very risky for my investment.

There is no particular time when you should increase the lot size. When you trade in the live market, you know it on the basis of your experience.

Has nothing to do with the pips gained. I could gain the same % growth on my account with 15 pips as you could with 150 pips or vice versa. Lot size should be based on risk %, SL in pips and pair being traded.

Start with the micro lot and when you get a better idea of the market, increase the lot size.

There is no particular lot size that you should trade.

I choose lot size depending on a profit target (in pips) and risk/reward in money terms relative to equity. For example if my profit goal in particular trade is 20 pips (stop loss 10 pips) and I want to risk no more than 1% of equity and want to earn 2% of equity and assuming my equity is 1000 USD, the preferred lot size 0.1 lot. A change in price by one pip will yield 1$ profit or loss, so 10 pips loss will be 10 USD and 20 pips profit target will be 20 USD.

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