Hi guys I’m new and I was wondering how do I easily figure out how much I’m putting on each trade?
For example:
I’m starting with just a $500 account and 2% per trade is $10 how do I convert $10 of EUR/USD Into a lot value? Is it 0.10 or 0.01 of a lot?
Also I’m thinking of joining FXTM and there leverage is 1000:1 can anyone recommend this broker? I live in Canada and am somewhat limited by choice of broker it would seem.
Thanks,
Rick
It depends on the distance from your entry to your stop-loss.
EUR/USD is $10 per pip per full lot (regardless of the size of your account and regardless of your leverage).
So a mini-lot is $1 per pip, and a micro-lot is $0.10 per pip.
You want to risk no more than $10 per trade. That means if you have a stop-loss of 10 pips, you can trade 1 mini-lot, but if you have a stop-loss of 100 pips (huge!) you can only trade 1 micro-lot.
Do you see how it works?
In reality, I suspect you’ll have a stop-loss of less than 100 pips and more than 10 pips, probably? So your position-size might be in-between a mini-lot and a micro-lot. Some number of micro-lots, in other words.
One last point: 2% is really very high, when you’re just starting. 1% might be much better until you’ve done a few hundred trades?
I strongly recommend avoiding it.
Partly (not entirely) because of what the fact that they offer 1,000/1 leverage tells me about their business model, the sort of customers they want to attract (inexperienced, wild gamblers!), and so on.
The fact that a broker offers a maximum of 1,000/1 leverage doesn’t mean that you have to use 1,000/1 leverage. And you shouldn’t. You can reduce yours (there’ll be a setting somewhere in the account to do this.) Until you’re very experienced, it’s really dangerous (and that’s why they offer it: they want to win your money). Better to start with 100/1 or even 50/1, in my opinion. But first find a better broker than FXTM!
Good luck.
Thank you, so you would recommend trading 0.05 of a lot that would be $5 and about 1% if I was aiming for 10pips?
Lot size is the distance of the entry to stop loss. Seeing your thread I must suggest not to go for this. Because their leverage facility is showing that how risky their offer is. I guess no experienced trader will go for this offer. It seems like gambling. If any trader goes with this offer I am sure that they are not educated trader and have minimum basic trading knowledge.
With a $500 account, I would suggest trading in 0.01 lots and with no more than 50:1 leverage