The smaller the candles, the bigger the lot size

@purple_hills - 6 months ago - Risk Management

I often hear traders ask how to select the right lot size, and I see different replies about the right lot size being correlated to your account balance etc. I don't dispute any of that but I want to also add that sometimes the size of the candlesticks could also play a role in deciding if you should increase or lower your lot size. Thoughts?

@stallone_g6 - 6 months ago

I agree, anytome I open the charts and notice the candlesticks are unusually short, I immediately know liquidity is low so several candles will have to form before I can make a reasonable profit. To solve this problem, I increase my lot size so that even with a few candlestick formations, I can still make a respectable profit while setting a small stop loss.

For example there was a day i noticed small candlesticks during London and i opened a 0.1 EUR/USD lot size trade and set a $5 stop loss at a fair enough distance from my entry. Now on a day where the candles were big, to set that same stop loss at that same distance, the stop would have been worth almost $12

@sandy20 - 6 months ago

Small or short looking candles are a sign of low volatility most times it is when the market is expecting a news release that you see short candles forming everywhere. For me i would not trade when I see short candles all over the place, but I agree with you- trading a bigger lot size will mean even with the short candles you can still make good money as price moves.