I’ve a quick question on how much money you expose of your account when placing a trade. I know we are advised to use no more than 2-2.5% of your total account when placing a trade, so let me ask a question by explaining what I’m doing:
I am demo trading with a �1000 ( I chose this amount, as I’d like to deposit this amount to start off when go LIVE trading). I have recently entered into a trade where I trade on $1 per pip. Now, the margin that I have used is at �200 (20% of account) I have put a stop loss of 10 pips i.e. $10 which is 1% of my account which I could possibly lose. Is the correct way to look at this, because if I were to use a margin of 2.5% of my account, which is �25 and at a leverage of 50:1 you can only buy �1250 of currency which you aren’t going to make a lot of profit on.
Now my question, is it correct where I use 20% of my account as margin, but only risk 1% of my account with my stop loss?
Many thanks guys and happy trading.