If ive been profitable with a small account $500, how to start trading larger lot sizes if account size is now $1000? lot size is now 0.10. should i increase? or not yet?
Base your position size on the amount of capital you are risking losing in the trade. Many traders risk only 2% - that is, they calculate that if price goes the wrong way, the level at which they will exit will cost them just 2% of the capital in the account at this time.
The risk will give your your lot size.
In theory, you should double your lot size (assuming your initial lot size is right) since your account doubled.
However, run-ups/downs are exponential. So, I propose instead of x2, maybe x1.15-1.65x instead, depending on the volatility of the pair you are trading.
I use a Position Size Calculator
Before you go bigger, make sure your strategy is consistently profitable over time. Also, reassess your risk tolerance. Can you handle the potential drawdown without losing sleep? And, super important, adjust only when your account equity has grown enough to maintain your risk percentage per trade. It’s not just about having the funds but also the mental readiness for bigger swings. Stay smart and keep those risk management principles tight!
You can increase lot size but I would recommend to keep risk per trade as a fixed percent from equity. Large loss are hard to recover and more difficult to weather through emotionally, as per my experience.
Ok so as the account grows the lot size too because 2% of larger account is bigger too. So ‘bigger’ account size doesnt really mean that as it is based on % of account size
Understood. Thank you for additional info.
Well, 2% risked from $5000 is a lot more than 2% risked from $1000.
Of course, If you make 3% profit on a trade based on an account which has $1000, you will make $30 profit. Doesn’t sound much does it: it isn;t a lot of money.
So if you now make 3% on your account which now has $1030, you will make $30 again plus 90 cents. So you could look at what is better for you today than yesterday and say, well, today’s trade was 90 cents better than the last one and I’m not happy about that, 90 cents is nothing. I want $100 tomorrow.
That would be the biggest mistake a trader can commit.
Yes I have many times felt the same.
Give this a go.
Plug in and bam. I’d stick to the fixed % risk per trade too.