Position Sizing

How big should your position be?

This is the easy one. You must decide, based on your risk management rules in your forex trading plan, what your position size will be.

This allows you to know your maximum risk.

How much are you willing to risk per trade?

1%?

2%?

5%?

10%?!

20%?!!!!

Or are you going to bet the farm?!!!!!

Yeah that’s right. Do it. Bet the farm.

No silly!

Don’t bet the farm!

Haven’t you been paying attention?!

You want to become a trader, not a gambler!

And unless you’re really a farmer, you probably don’t even own a farm anyway.

Position sizing is important because it helps your account stay healthy and ready for the next opportunity.

It is important to take note of how big or small you are trading.

By keeping track of position size in your journal, you can see whether you are comfortable trading large position sizes.

Or if you prefer smaller lot sizes while using wider stops.

Luckily for you, we have a gift!.

In our Tools section, we have a Position Size Calculator to help you do the math and find the right number of units you should be trading!

Sweet eh?

Reprinted from Babypips, the copyright all reserved by the original author.