What the heck is leverage?.
Forex Trading | Handel mit beliebten CFD-Paaren | Libertex Mio Kunden weltweit · 30 int. Auszeichnungen · 20 Jahre am Markt · Null SpreadsTypen: Forex, Aktien, Indizes, Währungen, Rohstoffe, Öl. Aug 02, · Now let's say you're trading lots, we need to convert that into actual dollar amounts (orders on the books aren't counted in lots (well they are, but anyways), they're counted in millions of units of currency at an appropriate price.
The market looked strong and suddenly I succumbed to the lure of trader's greed - I pulled my 40 at 97, seeing visions of the market breaking out and retesting the days highs 15 ticks higher. Suddenly the market spiked up through 98s, as though someone were covering shorts in a bit of a panic, and the 99s traded. I got even more bullish. Suddenly I realised that might have been a short term top - classic panic covering, right at the level of the previous high, and looking bullish just before it pulled back.
I offered 98s, but the 97 bid eventually traded out, and I missed my chance of a fill. The market then ranged between 94 and 97 with small size at 93 and 98 briefly for the next odd minutes, getting tantalisingly close to my desired 98 fill price, but I stubbornly refused to accept 97s. Finally the 93s started trading as the US T-bonds opened, and I stopped myself out at breakeven. Despite this, I was pleased that I had finally done my first big trade in that market.
I had finally fulfilled my ambition to trade a lot, win or lose! My entry and first exit was good, but then I let first greed and then stubborness get in the way of what would have been a near-perfect trade.
Still, I had made a nice profit, and it was better than losing. So, my advice to anyone who wants to step up their size is this - wait for a really good setup, then get in on 5 times the size you a comfortable with.
Then set your profit target and leave well alone! Avoid the "coulda, woulda, shoulda" and stick with your plan. It will be fun to see how many people on this board all of a sudden are trading lot bunds and switching to x-trader the coming weeks. You have inspired me now. I have been meaning to increase my size 5 fold for quite a while. Will try it soon. If i do it I will owe my sucess to you. Your step by step walk through of your thoughts during this trade was a great read.
There's actually a nice lesson or two here. You showed how emotions need not be in trading decisions. Your planned entry and exit were there, but you changed your plan due to emotion. Also, if you have a trading method that works, it works no matter what size you have on. The market doesn't know that John Doe has put on size and will act differently this time. By the way, I'm curious what your fill prices were. As much as it's a great story, that is not the way to increase size.
To jump from 20 or 40 to is disaster in the making. How do you ever know what a good setup is? I have traded the ES for over 5 years and often times what might look like a good setup isn't. You just never know. The standard size for a lot is , units. There are also mini-lots of 10, and micro-lots of 1, To take advantage of relatively small moves in the exchange rates of currency, we need to trade large amounts in order to see any significant profit or loss.
As we have already discussed in our previous article, currency movements are measured in pips and depending on our lot size a pip movement will have a different monetary value. We are looking for the exchange rate to rise i. This is the equivalent of pips. Therefore lot sizes are crucial in determining how much of a profit or loss we make on the exchange rate movements of currency pairs.
We do not have to restrict ourselves to the historical specific amounts of standard, mini and micro. We can enter any amount we wish greater than 1, units.
So with a Euro denominated account a fall of 50 pips to Trading with leverage allows traders to enter markets that would be otherwise restricted based on their account size. Leverage allows traders to open positions for more lots, more contracts, more shares etc. This is what we call our margin.
For each position and instrument we open our broker will specify a required margin indicated as a percentage.
Margin can therefore be considered a form of collateral for the short-term loan we take from our broker along with the actual instrument itself.
There are also mini-lots of 10, and micro-lots of 1, A standard lot is similar to trade size.
The standard size for a lot is , units.