Hi everyone!
I just would like to ask what is better in a standard trading behaviour use always the same size for all the trades or increase the size according to the situations? ?
Thank you all!!!
Your position size is determined by 2 things: your risk & your stop loss.
If you trade the same position size with a 10-pip stop & a 75-pip stop then you re going to have drastically different results.
Long story short: given your options, it should vary according to the situation i.e. your SL size.
Yep, I agree with Baz.
I’ve not been trading long on my demo account but I opt for working out my stop loss first, and from there I then calculate my position size.
Last week I had a stop loss of 135 pips which unfortunately got hit as my trade went south due to the Fed interest rate freeze, but that 135 pips represented just 1% of my account as all my trades do.
Cheers,
Simon
So…are u saying that if I have smaller stop loss I can increase my lot size, if I have bigger SL I should decrease the exposure…isn’t it?
Many thanks
Technically your exposure would be the same. As part of your trading plan, you should outline how much you are willing to risk on a trade; lets say that you are willing to risk 1% & that your account balance is $1,000. Your 1% would be a $10 risk.
This means that you could trade the 5mins TF with a 5-pip stop & only lose $10 or you could trade the daily charts with a 150-pip stop & still only $10.
The link below is for the BabyPips position size calculator, have a play about with it.
http://www.babypips.com/tools/forex-calculators/positionsize.php
Thank you!..great help!!
If using two or more different methods with different [B]profit factors[/B] (overall probability-pattern of reward to risk), it makes sense to [I]vary their relative position-sizes according to their relative profit factors[/I], and in terms of long-term, overall risk and profit, it would be a pretty clearcut mistake not to.
Explained fully in this book: [I]Profitability and Systematic Trading[/I]: Michael Harris (Wiley, 2007).
Here’s a quick guide on how you should be calculating your position size based on your risk preferences and stop loss: Forex Position Sizing
Thanks!!!.
I will annote this book on my next readings!!!
In terms of determining the size of trading, then adjusted for capital and pair. If you have a small capital, then it could use a cent account. Furthermore, you can increase the size from time to time.
That should be a part of your trading strategy and your risk management.
Yes…that’s what I’m doing. …
Trading micro lot (0.01)
It’s only that I thought that I made a stupid mistake increasing the size in some trades simply because I was thinking that that was a good trade.
My concern was if an expert trader always stick with a determinate size no matter what.
Because my trading size is pretty much always the same my risk management is dictated from my risk reward ratio (2:1 or 3:1)