Hi, I am try to ask that how much lot size I should use on an 100$ account?
I have never understood why people refer to lot size when trading Foreign Exchange. Each commodity has a different lot size and therefore you need to know how many mini or microcontracts you are controlling. With Forex, the exchange rates or differences thereof, of (take profit minus entry) and (entry minus stop loss) are measured in PIPS (percentage in points). Eg. If you are buying the GBPUSD at 1.3000 and wanting to take a profit if the rate increases to 1.3100, that is a 100 PIP difference. If you want a 2:1 profit / loss ratio, you would enter a stop loss at 1.2950 (50 PIPs less than entry at 1.3000) to make sure your losses are limited if the trade goes against your plan. Now if you have a $100 account, and you don’t want to trade more than 5% of that account on each trade, your 50 PIP stop loss would need to represent five dollars (5% of your bank). If 50 PIPs = $5, then your lot size in PIPs is $5/50 PIPs or 10c per PIP. You risk five dollars. If your trade goes the way you plan, you exit at 1.3100 and make 100 PIPs profit which is 100 x 10c or $10 profit. A 200% gain on trade and a 10% gain on your bank.
Does this make sense?
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That was a great response by Mondeoman!
In case it is a little too complex - with a $100 dollar account you probably shouldn’t be trading anything more than nano lots (0.001) and even that may be too much.
Trade a demo account and master the skill before giving your $100 away to the market. In the meantime continue saving and building up your real account so you will have a greater chance of success.
All the best,
Nate
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Agree.
There’s a babypips lesson on this one I think:
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Thanks didn’t know that. Must be a common question here!
I agree with the above, this is what you should be focusing on for now.
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Ideally lot size should be as small as possible. Something like 0.01 lots.