# Position confusion

Hi Guys,

I’m using Metatrader 4 and I’m practicing with a dummy account.
From what I did so far, I can’t see what the term “position” really means. Each time I place a trade, I have “1” selected on the “Volume” dropdown box.

It seems unlikely to me that it is the same thing starting with \$1000 or \$1000000, but in my case it wouldn’t matter, because I only make things pip by pip.

Aside from the fact that I have more padding to lose more trades and keep on being in the game, can someone explain to me what is the difference between having \$1000000 and \$1000 in terms of profit?

Dinis

Positions on MT4 had me confused for a while and I’m no expert, but…

1.0 = 100,000 units,
0.1 = 10,000 units,
0.01= 1,000 units

It’s all about the amount of risk that tou put forward per trade.

If you go to “Tools” next to the Forum tab, there is a position size calculator. Plug in the information it asks you for and it will tell you what size lot to use.

my rule of thumb is \$1000 account= 0.01 lots,
\$10000 is 0.1 lots,
£100,000 = 1.0 lots.

I think there is a good section in the school.

Hi THEWALLHITME,

I’m still a long way to go to get into that chapter. I’ve tried the tool you’ve mentioned with the following values:

Account Currency: USD
Account Balance: 5000
Risk Percentage: 10
Stop Loss in Pips: 100
Currency Pair: EUR/USD

Amount at Risk:500 USD
Position Size:50000 units
Standard Lots:0
Mini Lots:5
Micro Lots:50

Does this mean I should be selecting 0.05 on the Volume option in Metatrader 4?

well, first of all, I would seriously suggest reducing your risk percentage to 1-2%.

I believe 50,000 units is 0.5 on MT4. However, I would say that is way too large for your account size. remember you want to reduce your risk as much as possible.

Doing the same calculation but only risking 1% comes up with 5 micro lots, which is 0.05 on MT4.

Keep in mind that the larger your stop, the smaller your position should be to reduce risk.

I know from experience that it is tempting to use larger lots to make big profits, and it is really only natural to give it a go, but the reality of it (which I have found from experience now) is that you will make a few profits, but lack of a clear system and knowledge will mean you will make lots of losses, and end up with a rubbish looking account. Play it safe and use small lots. Profits will be smaller, but losses can be reduced and keep your account going.

As you are trading as you read, I dont think it would do any harm in skipping ahead to the section about position sizing.

Thank you for your reply and the suggestion I’m still quite puzzled about the Fibonacci retracements, so I didn’t want to jump to anything more advanced prior to learning the basics, but you are absolutely right. Currently reading the risks lessons…