Sorry for what may sound like a silly question but i needed some help in understanding position sizing. I used the babypips calculator (AC = GBP > AB = 10,000 > RP = 2% > SL = 50 pips > CP = GBP / USD > ASK = 1.2055) which came back with
Amount at risk = 200 GBP > Position size (units) 48,220, Standard lots = 0.4822 > Mini lots = 4.822 > Micro lots = 48.22
The question i have is, if i put on a position with 200GB then what scenario / benefit would buying 0.4822 standard lots give me vs buying 48.22 micro lots??? i.e. when would somebody purchase SL vs Micro for example and what is the pros n cons?
Money Management is a part of strategy and your capital. With low amount of capital like 1000 GBP, transactions with 0.4 standard lot will be suicide for your account ( it is called over-leverage), but you can easily open 4 micro lots and survive more loss transactions in a row.
You can build strategies with different stop loss in pips. For example, you have strategy with SL 100 pips so you can open transaction with 2 micro lots, and you will be under 2% risk your account.
The forex market is very liquid, that is why you have many options to build strategies and money management.
Scalping or swing trading- both are at the peak of their popularity and a growing number of traders are falling on this type.
Position your trades and don’t take too much risk in your trades because it will keep you out of profit.