How many traders do you think ask this question to themselves? Well, if we dig deeper into statistics, we’ll see that #1 reason differentiating successful traders from the rest 90%+ is proper use of margin and leverage. For every $50,000 in their account, most experienced forex traders and money managers trade one standard lot. If they traded a mini account, this indicates that for every $5,000 in their account, they trade one mini lot. Allow it to soak in for a couple of moments. Why do less experienced forex traders believe they can win by trading 100K standard lots with a $2,000 account or 10K micro lots with $250 if professionals trade like this? Never open a "regular account" with only $2,000 or a "micro account" with $250, no matter what the forex brokers tell you. Some even enable you to start an account for as little as $25! The number one reason rookie traders fail is because they are undercapitalized from the start and have a poor understanding of how leverage works.
However, this all also goes back to our previous lessons on figuring out what type of trader you are. For instance, we’re slightly more aggressive (and as our SL are usually extremely tight), we stick with 1% (which still allows us to open 2 lots for 50.000$). However, if you have hard time monitoring the trade or prefer to have more “breathing room” for a trade, consider 1 lot for 100.000$ of your trading capital.
All the best and stay safe, fam!
However, this all also goes back to our previous lessons on figuring out what type of trader you are. For instance, we’re slightly more aggressive (and as our SL are usually extremely tight), we stick with 1% (which still allows us to open 2 lots for 50.000$). However, if you have hard time monitoring the trade or prefer to have more “breathing room” for a trade, consider 1 lot for 100.000$ of your trading capital.
All the best and stay safe, fam!