Summary on Position Sizing in Forex is an overview of what we covered in previous lesons. How to Calculate proper position sizes, factors required etc.
Position sizing is the most important tool when it comes to trading with risk management.
In fact, it tells you how much money you should place in every trade you take.
Most traders mess up in position sizing trying to fit their stop loss to their desired position size instead of fitting their position size to their desired stop loss.
To trade successfully you need to first know how much you want to put in a trade so as to determine your risk and expected return.
WHAT IS forex POSITION SIZING? – summary
Position sizing is setting the right volume of the amount you want to buy or sell for each currency pair.
What you need to know to calculate a proper position size.
- Your account balance/size.
- Your percentage risk per trade
- Stop loss in pips
- Value per pip
- Currency pair you are trading
Position size = (Account size ×% Risk per trade)/ (Stop loss in pips × Pip value)
Final word – forex position sizing summary
No matter the size of your trading capital account, if you use a big stop loss on your trade, you will have to use a small position size. The reverse is true
When you take up positions that are too big , your account will get wiped out very quickly.
Never the less, when your positions are too small, your account will never grow.
Therefore, you should use sizes that are appropriate to your account balance.
Once you know how much you want to risk per trade. Where to put your stop loss after your entry level. You can determine your position size.
Setting the right position size helps you to use the correct amount of units to buy or sell a currency pair.
This in the long run will make you a consistent profitable trader that you have always desired to be!
Procrastination to trade is when your trading set up confirms and you hesitate to take trade. Or your trade show all failing signals and you hesitate to close trade to cut losses. Also, in cases, where you sometimes hesitate to take profit because you want to...
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