Pls I need some clarification on this: distinction between notional value and position size.
If I go long on 1 mini lot of eurusd @ 1.5000, what is the notional value and position size for this trade?
One mini-lot of EUR/USD
• Position size: 10,000 units of EUR/USD
• Notional amount: 10,000 EUR
• Notional value: depends on your account currency
If your account is denominated in EUR, then the notional amount and the notional value are the same, that is, 10,000 EUR.
If your account is denominated in another currency, then the notional value in your account currency must be determined using the appropriate exchange rate.
Example: if your account is denominated (funded) in USD, and the current exchange rate is EUR/USD = 1.5000 (to use the price in your example), then 1 EUR = 1.5000 USD, and the notional value of your position is 15,000 USD (that is, 10,000 EUR x 1.5000).
Note: Position size, notional amount, and notional value do not depend on whether you are LONG or SHORT. The base currency in the pair you are trading determines these metrics, and that base currency is fixed. In EUR-pairs, the EUR is always the base currency, whether you are LONG or SHORT.
This is very helpful. Thanks
How should i choose my broker, should be based on reviews and rating ?
Or should i choose my broker based on my trading style ?
Helloooo Donovan. Do you have a particular broker you’re looking at? Have you been demo trading? There could be different interfaces for different brokers so if you want to really see your options (and if you have time), you can try creating demo accounts with different brokers.
Narrow down your search on the basis of your trading style, then filter out some on the basis of ratings on popular broker rating websites. As for the reviews, they are usually ambiguous. Once you have found one that fulfills all your criteria, open a demo account with that broker for sometime and if everything works smoothly continue with that broker
Choose your broker on the basis of their reviews and test their trading conditions by opening a demo account with them.
Notional value is the valuation of an underlying asset in a derivative trade, whereas position sizing is related to profit maximization with your preserved capital.