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How many lots do you use?

Discussion in 'General Forex Talk' started by cowmadagan, Jan 5, 2010.

  1. cowmadagan

    cowmadagan Sergeant

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    If you're going to trade with lower risk, it's a lot easier to trade with one lot. The problem is that I like to use multiple take profits so that I maximize the amount of the curve that I catch, because I actually do a lot of one minute chart trading. I've toyed with using two lots and doing my take profits with single lots at a time and letting the other one ride, but I'm getting more cautious with age and that's why I've been sticking to only one at a time.
    I'm really thinking about getting into two lots again, and it's actually safety driven, not overconfidence driven.
    Anybody have any remarks?
     
  2. Pharaoh

    Pharaoh Colonel

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    One option would be to find a broker that lets you trade minilots. Then you could close your full lot anywhere from 1 to 10 minis at a time. You could also scale your trades up from 1 lot to 1.1 or 1.2 lots instead of jumping from 1 to 2 lots.
     
  3. Bowmaker

    Bowmaker Private, 1st Class

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    I agree with Pharoh that you should consider using minilots. It gives you so much more flexibility. I'm a relative newbie but one thing I've picked up pretty quick is Money Management. By placing 1 or 2 standard lots per trade dosnt really protect you to well if the trade goes against you. I've learnt to firstly look where i'm going to place my stop, usually just below/above previous lows/highs, then calculate the number of pips to this point and work out how much to stake based on the percentage I'm prepared to risk on each trade. Each trade would be enterd at a different lot size according to my risk. For example if the previous lows/highs were say 200 pips away and I was prepared to risk 2% on the trade then I might place 0.5 lots. If the previous lows/highs were only 100 pips away and I was prepared to risk 2% then I might place 1.0 lots. In this scenario my risk is the same
     
  4. cowmadagan

    cowmadagan Sergeant

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    Jeez, you're serious? You risk off of yield rather than account balance? I've never heard of that.
     
  5. Bowmaker

    Bowmaker Private, 1st Class

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    Maybe I'm wrong but what I do seems to work for me. I always know exactly what I could lose if I'm stopped out. I usually risk 2% of account balance per trade. Anyone else have any ideas??
     
  6. cowmadagan

    cowmadagan Sergeant

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    Ok...cool...so that means the answer is no. You still set risk on your account balance, and set lots on target pips...sounds good to me.
     
  7. cowmadagan

    cowmadagan Sergeant

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    After more research and practice, it seems that it's just adding to your troubles if you can only afford to trade in single lots.

    Also, since I find that predictions of less than 30 pip movements are too random, I also don't like strategies that use eight minilots with spastically tight stops and take profits at 10 pips.

    I really believe that you need to do every trade with no fewer than two lots (not necessarily standard or mini, but even micro) to have a very protective strategy.

    If you trade with two lots of any size, you can do a take half profits and move your stop to breakeven or higher.

    Admittedly, you can also do this with a trailing stop once you're in the green, but I prefer to monitor my trades myself.

    (news trading, doesn't really apply to this though)
     
  8. Eric Alyea

    Eric Alyea Master Sergeant

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    from bottom of check list

    “L1" Lot size is your “Balance” rounded down to the nearest $5,000 increment. Divided by 100,000
    “L2" = L1 x 2
    “L3" = L2 x 2

    I haven't had time to publish this from the seminar yet, but the question was raised

    http://www.forexpeacearmy.com/forex...uellatorus-review-eric-alyea-2.html#post30779

    check list exert:
    GBP/JPY
    Short Stack Buy Calculations:
    Take Profit (TP): . .
    1st Change Lot size (CL): . . (TP - .15 = CL) L1:_____ L2:_____ L3:_____
    1st 5 pip spacing (5P): . . (CL - .35 = 5P)
     
    #8 Eric Alyea, Mar 5, 2010
    Last edited: Mar 5, 2010
  9. Ricex

    Ricex Sergeant

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    I tend to use a minimum of 2 lots and use the first lot to pay for the SL. If I have a SL of say 20pips, as soon as the price moves 20pips I cash-in 1 lot so it pays for the SL. This way I can leave the SL where it is and even if I get stopped out I will still be at breakeven.

    This is not a 100% method of course, there are times when you have 2 lots go against you, but in the time that I have been using it it has helped to reduce a lot of my failed trades to just breakeven trades and makes up for the occassional double lot hit.

    The other advantage is that you can avoid being stopped out prematurely by leaving the SL in it's original position for the early part of the trade. As the trade moves away you can move the SL up to the entry point and get those insurance pips back and manage the trade from there.

    just my 4 pips worth.
     

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