Hi People,
I am a newbie, though I have a demo account with FXCM my mind refuse totally to function as to understand how much of my money am I exposing in a trade so I could know how much I will be left with if I place trade? is there someone that can help me with a formula of calculating this? Also I do not want to expose my self into gearing, how can I place a trade without gearing? Help, very desperate. once I could move from this position then I will be able to enjoy my demo account and I will know where I am heading. right now I am just placing orders with nothing to learn from those trades. Awaiting response
I highly recommend going through the BabyPips course, it gives you insight and a general plan of why you enter trades, and how you can learn from them.
I Learn a lot form babypips pre-school and other courses. I learn one thing that lot size should be controlled by trader. It is easy to take a big lot, it increases risk in trading. First I tries trading with mini lits in standard account. You can calculate lot and risk to your favorite formula. As I prefer to trade between 3% to 5% risk.
I understand your frustration, it is ofcourse essential to know how much you are risking, and how to set the lot amount correctly.
Currently I am using Position Size Calculator - BabyPips.com
Try it, its really helpful. Just fill in whats your balance and how much you would like to risk and it calculates them lots by itself.
The minimum trade size is 1K, or 1 micro lot. So if you are trading without leverage (1:1), you would need 1K in your account to hold the position. Say you have $5000 in your account, if you are trading without leverage the maximum amount of positions you can hold would be 5 micro lots.
Trading on leverage would allow you to open positions greater than your account equity and magnify movements in the FX market. But please remember that leverage can act as a double edged sword magnifying both profits or losses. Movements in FX happen in relatively small amounts, you take a look at EUR/USD, and it moved only about 1.5% last week. The attraction of leverage to FX traders is the ability to magnify the amounts.
In a 5K position, a 1.5% movement in the currency may have earned or lost $75. With leveraged trading, a position size 10 times larger of 50K may have earned or lost $750.
In the below screenshot of Trading Station platform, the order window will display some useful information based on the potential profit or loss of a trade based on your order size. When you select the trade amount, and set a stop and limit, you will notice at the bottom of the order window it will display the potential profit or loss based on the trade size you selected.
One lot, as someone already explained, equals 100 000. But, and it’s important, it’s 100 000 of base currency. Base currency is the one that comes first. For example, in eurusd, eur is the base currency and 1 lot is 100 000 eur. In gbpusd the base currency is gbp and one lot equals 100 000 gbp. That’s why the profit you get out of one unit is different.
