Lot Size And Outcomes
You know, for the longest time, I didn’t understand why I felt I was risking too much when in fact, I was risking my usual 2% per trade and nothing more (except for in my ill-disciplined days!)
Could I find better entries on lower timeframes? And why? Because it meant I could cut my risk and have a better risk to reward ratio, I could get a 5x risk to reward ratio instead of the 1:2 I was getting prior.
Here is the kicker – I could do this and still BE RISKING THE SAME OL’ 2% per trade!!! Meaning I would get more out of my positions (i.e., where I would have made 4%, now I could make 8% – 12%).
Does this mean my lot size had to change? No, not at all. It didn’t have to change, but if I wanted to, I could have larger lot sizes, risking the same 2% dependent on several factors such as the stop loss size and the currency’s pip value.
So then this begs the question – Does the lot size determine the entire trade OR is it where you enter your positions and where you are willing to call it quits??
In my opinion, it is the latter! Why? Because with proper entries and phenomenal stop loss areas, you can grow your account to its fullest potential.
The risk management strategy and the lot size need to be tested by every Forex trader for themselves, and there are different things to look out for in terms of choosing the best lot size for your strategy.
The outcome one can expect when diving deeply into their risk management strategy is significant growth once you have mastered your entries and your stop losses, considering the different market structures or possibilities (like stop hunts).
Analyze your trades and see what you find.