How does lot size affect trading?
Lot size is like a shopping cart, when you fill it to the brim you pay more at the counter. So, when you choose a big lot size, your broker will require you to put down a bigger sum of money before the trade can go ahead.
When you increase your lot size, you are technically filling up your " forex shopping cart", so you should have sufficient money in your trading account to enable you to "pay" for the items.
When you increase your lot size, you stand to make bigger profits (and losses too) but the margin required to open the trade also becomes higher. So, with a small account balance, you will not be allowed to trade big lot sizes.
If you are not an expert trader who has been making profits consistently, avoid big lot sizes cos you will blow your account in seconds. A friend of mine blew a $1,000 dollar account in a few minutes of trading big lot sizes.
For me, I stick to my 0.05 lot size for peace of mind, if i see the trade is going in my favor i may add more 0.05 lots to it gradually.
Lot size is directly related to your trading account balance, you cannot do big lot sizes if you don't have a sufficient account balance.
Lot size is also directly related to pip value, for example for eurusd pair when you trade a 0.01 lot size the value of each pip is $0.1 USD, but when you advance to a larger lot size like 1 lot, the value of each pip becomes $10.
Trading a bigger lot size makes you more nervous, it definitely affects your composure. With bigger lot sizes comes bigger drawdown and it can make you quit the trade prematurely if you cannot handle seeing a huge drawdown.
Trading a bigger lot size makes you more nervous, it definitely affects your composure. With bigger lot sizes comes bigger drawdown and it can make you quit the trade prematurely if you cannot handle seeing a huge drawdown.
It's about tolerance. And you build it by doing it.
You see experienced traders never stop growing the lot size, the real metric of trading success is are you challenging yourself with larger positions.
A few years ago even a 7 usd loss hurt me. Now i can take a loss of 2000 usd in 1 trade without breaking a sweat trading 20 lots. My goal is to trade 500 standard lots in a year. that is 5000 USD per pip.
You can repeat what you have done on small lots on larger lots then you can make more money with what you know. But you must be aware to not blow up in 1 trade as trading successfully requires a sequence 10-20 trades to survive not just 1 trade.
The key is to never stagnate. if you keep trading small after you have mastered a system you are just stagnated, you have to keep pushing your boundaries.
That is why trading is super lucrative, it can scale if you know what you are doing.
Lot size has a direct impact on trading risk, profit, and margin requirements. In simple terms, it determines how much each pip movement in the market is worth. I recently began trading..
With a bigger lot size I spend lesser time in the market before cashing out. This is what I like about big lot size; the price only needs to move around 3 pips and I have made enough profit for the day.
With a bigger lot size I spend lesser time in the market before cashing out. This is what I like about big lot size; the price only needs to move around 3 pips and I have made enough profit for the day.
I lost more money trading small 0.01 lot size than i did trading bigger 0.2 lot sizes because trading bigger lot sizes makes you trade less frequently, and you make money faster and leave the market. Small lot sizers stare at the chart all day and over trade trying to meet their profit target.