The benefits of determining the volume of items are that help better control of trading rooms and the value of the portfolio. Here is how best to define the volume of items.
Selecting the correct method for determining the volume of items affect your success as a forex trader just as determining the direction of the position. As a result, experienced traders highly recommend using this method in your trading plan that will help you limit your risk in trading. This strategy helps you to not take too much risk and you could lose a lot more than you can afford.
The strategy for determining the volume of transaction is a key element to Money Management Account. Successful traders know exactly what percentage of the account will be put at risk in each transaction. They also try to minimize the risk to avoid excessive losses. However, the increase in the volume of transactions in raising account makes sense only if the percentage risk remain. In addition, a decrease in volumes in volatile markets will also reduce the risk for your account. Opposite – trading larger volumes of slabovolatilen market can bring you more profits.
Some of the popular strategies for determining the volume will present in today’s article.
Fixed volume of lots – These traders that simplify maximum strategy always use the same volume of trade, regardless of the number of positions that are open, thus limit the overall risk of the account. This strategy allows to reduce the risk if things do not go well. And if the portfolio increase and decrease can easily do the same with the lots.
Fixed to the overall risk of the account positions – This strategy is more complex and uses an algorithm which determines the risk of a position to the portfolio and is used for trading only a certain percentage of the account. Using this strategy, traders with larger account will assume increasing risk with every transaction, and for those with a smaller account risk can be kept the same. This ensures Trader, there will be a position to fail the entire account.
Increasing volumes on the basis of risk / profit – Strictly follow the plan guarantees the successful traders trade, previously know the possible profit and loss from any position. This allows the trader to decide how much risk you can afford and how much profit to expect.
The volume of the positions and gambling – Forex trading is often likened to gambling than investing. As a result, it is very surprising that traders have begun to train seasonal speculators. As an example – you can raise the volume nasoro if you won several consecutive times or to lower volumes in several consecutive losses.
Beware of using too much leverage. Due to the nature of forex trading is possible leverage to increase to 1: 500. This means that $ 1,000 in the account can open a position equivalent to $ 500,000. But if you take advantage of this and find too much for your account transaction – this can lead to a quick and painful loss. Of course the use of a large volume with close stops may limit the risk enough to afford such trade.
However, experienced traders prefer lower leverage and the ability to control the stop position and to determine the risk of any position or portfolio as a whole. This significantly reduces the chance of activating the taillights of their positions, especially in volatile market.