# Start paying attention to position size

When it comes to risk management, everything counts. And defining the right size for your position plays a key role in the equation. Intuitively you might think the logic behind is pretty straight forward: if the position is a win, go big, otherwise, opt for a moderate size.

Not so fast cowboy. Successful trading is about all being methodic, that means finding a way to determine when to buy, when to sell and sticking to it for the long run. So... time to leave behind your carpe diem approach and get serious!

Defining the right position size is great to keep you inside your risk comfort area. Believe us, finding your position size is not as difficult as you might think. First, time to gather some info:

• Account balance total
• Account percentage to risk
• Currency pairs rates
• Stop loss positions (pips)

I get it. Writing down some numbers don’t seem to be an issue for you. So let’s get to work with a quick example so you understand first hand how to calculate position size.

#### Case:

Edward deposited 10,000 USD into his trading account. That’s his total balance. He is trading with EURUSD because he likes volatile trades. Also, he tries to risk nearly 200 pips (stop loss) per trade and no more than 1% of his total account balance.

• Step #1: 10,000 USD x 1% = 100 USD (this is the amount he is OK to risk)
• Step #2: 100 USD / 200 pips = 0.50 USD / pip
• Step #3: 0.50 USD / pip x [10,000* EURUSD units / (\$1 / pip)] = 5,000 EURUSD units

*10,000 units of EURUSD equals to 1 mini lot.

• Step #1: 10,000 EUR x 1% = 100 EUR (this is the amount he is OK to risk)
• Step #2: 1.5000* USD / 1.0000 EUR) * 100 EUR = 150 USD
• Step #3: 150 USD / 200 pips = 0.75 USD / pip
• Step #4: 0.75 USD / pip x [10,000* EURUSD units / (\$1 / pip)] = 7,500 EURUSD units

*In order to convert EUR to USD we took a 1.5 exchange rate as an example.

Source   Presented by Fort Financial Services
Is gold the best safe-haven asset?

From the thousand articles you read this week about the market, gold has been mentioned over and over again as a safe-haven asset. And yes, despite...

Bitcoin: a real investment?

The fact that you made a couple of bucks buying and selling Bitcoin doesn't make it a true investment. At least not for Warren Buffett, one of the world...

Habits that reduce your Forex risks

There are plenty of blogs out there. Some good, some not. And there are thousands of publications talking about risk management. While many...

A word on treasury yields

The yield of the benchmark 10-year Treasury note reached 3 percent in the previous session, a level not seen since January 2014. Gary Pollack, head of fixed-income...

A synthetic cross currency pair refers to an artificial combination of currencies usually not available in the market. If you are taking your first steps in the Forex market...

Easy ways to avoid scammers in Forex

The Forex market is not a scam. In fact, it is an amazing place to make money. Unfortunately, dirty scammers (which operate not only in the Forex market...

Trading journal: should you keep one?

There are so many Forex blogs out there. Sometimes I think too many actually. But some of them are pretty useful (like ours, of course) and a common...

How to 'trade the news' in forex?

I am sure you've heard of it. The term 'trade the news' refers to those guys who would rather read newspapers all day instead of sitting...

Understanding the US dollar index (USDX)

If you are trading Forex for a month or so, you;ve probably came across with the term ;US Dollar Index; or ;USDX;. We all know what a dollar is

## Top 10 Forex Brokers 2019

Best Forex Platforms 2019

A variety of web terminals and specialized software makes a choice of a trading platform a difficult one for a novice trader. What should be this vital decision based on? To begin with, it is necessary to highlight the main criteria that high-quality software must meet for making money on financial markets...