Trade Size in Forex is Important

By Casey STubbs — Follow Casey on Twitter

Today I am doing a special article and Video about how to determine your trade size in the forex market. This is a crucial part of money management that many traders don’t have a complete grasp of and that hurts their trading. There are many ways to manage size and manage money in forex. The most important thing is that you always have total control of your risk. IF you do that your account will never be in danger of catastrophic loss– meaning a margin call or blowing the entire account.

Trade Size Matters:

I am sure you have heard how to do this many times and you are thinking not another money management article! However my question to you is have you mastered this and do you practice trade size and money management sizing religiously? If the answer is no, I want you to make a decision right now that you are going to start taking responsibility for your risk and stop trading recklessly. Can you do that? YES you can.

Listen if you want to make a change in your trading make your committment and write it in the comments and then as a community we can hold each other accountable for our trading. Get a friend to help you.

I have a real life situation for you. I recently lost 30 lbs, I tried several times to lose the weight but never could do it. Until one day I met some friends that inspired me to give it one more try. So I did, then I failed for a week, tried again, and failed again. I was determined to make it happen so then I started educating myself on what to eat and practice discipline in portion size. I started to show some progress then that encouraged me so I gained confidence. Once that confidence kicked in it gave me strength to follow my plan with more discipline. After that losing weight was easy, the whole problem was me the entire time!

So I am going to make a guess that YOU are the problem with your trading! So I am hear to encourage you and tell you that you can do it! Go ahead and make that decision right now that you are going to take control of your trading destiny and control your risk. Put that comment down and an entire community of traders will be on board to help you.

So How do we do this:

1. Make the decision
2. Write down your account value.
3. Determine how much you will risk per trade. Either a % or a Fixed Dollar Amount such as $100
4. Then find a trade on the chart and calculate the stop loss.
5. After the stop loss is calculated use our Forex risk calculator to determine your trade size.

*I have two good articles about Trade Managment I recommend using a risk to reward of at least 1 to 2. If you can get it higher than that it is even better. Here is another good video about the benefit allowing your trades to be larger winners than a losers, risk to reward ratio is so important to profitability.

We have a new Forex Risk Calculator coming out in a few days which will be much improved over the one we currently have, I will send an announcement when that comes out.

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Casey Stubbs is the founder of Winners Edge Trading, which is one of the most widely read forex sites on the web. Winners Edge Trading has trained thousands of people to trade the Forex markets.

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  • You are welcome, I think it is great that you are managing risk. IF you do that the next thing you will want to work on is the Risk to Reward Ratio.

  • Larry we are actually looking at adding a free tool to the website that will help traders do this.

  • Larry Kemosabe

    Casey…good advice.  Do you folks offer an application for selecting the most promising long and short pairs for a trade?
    Thanks,
    Larry Poh

  • tarek123

    Thank you Casey for your article.
    I never risk more than 2% in my trade with a small account of $ 3000.
    My main obstacle is that I can’t find or have  consistent profitable strategies.
    I also have a lot of fear pulling the trigger and some times some greed.