How to calculate which lot size to use?
As has been said multiple times before, our standard risk per trade is 1% of our total trading capital. To put it another way, we are willing to put one of our hundred eggs at risk so that we can try to get more.
Stop-Loss levels are often placed 30–60 pips away from the trade's entry price.
However, because of fluctuations in the value of different currency pairs, the SL level chosen for any one trade can vary widely (major pairs have small differences for the most part, while minor and cross-pairs have big gaps in pricing).
This article will demonstrate three arbitrary scenarios and explain the appropriate lot sizing to utilize depending on the Stop Loss and the proportion of the total capital risked, while also accounting for the size of the trading account. For the sake of clarity and ease of understanding, all numbers used are fictitious.
Have fun with the concept, and if you have any questions, please ask them below.
