Trading size

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!!!
:wink:

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 :slight_smile:

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!! :smiley:

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!!! :wink:

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)