I’m very confused about Money Management and how to apply this when entering a trade. I have a $5000 demo account at 1:50. If I only want to use 2% of my trading account per trade, how do I determine the “Volume” in the MT4 trading window. I guess the “volume” entry (in the Order window) has something to do with lot size?? But there’s no way for me to indicate that I want to use $100 out of my account (for instance).
How can I determine the New Order “Volume” that I want to use for a trade so that I only use 2% of my $5000?
If someone could point me in the direction of reading material to help me understand all this, I would be most grateful.
The 2% risk concept is intrinsically linked to the following:-
-your stop loss
-your account balance of $5000
-your account currency
-the currency pair you are trading (specifically the counter currency)
There is a calculator on this site that you can use to get the correct lot size (volume) once you have all the above numbers:
if you go live in the future… your risk capital to open the account will be $5000? if the answer is NO, adjust your demo account to reflect that because then you will experience a different way to adjust your risk management to the realms of the love market.
