What are ideal positioning for using micro lots


Forex traders often use micro lots to keep their positions small in order to fine-tune the risk of small accounts.

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Ideal positioning using micro lots

Forex traders often use micro lots to keep their positions small in order to fine-tune the risk of small accounts.

Suppose a trader buys GBP / USD at 1.2250 and wants to set a stop loss at 1.2200. They risk 50 pips. They have a $ 1,000 account and are willing to take the risk of 2% of that, or $ 20.

To find the ideal position size in a micro lot, you can assign the value to the following formula:

Dollar by risk / (risk per pip x micro lot pip value) = micro lot position size
$ 20 / ($ 50 x $ 0.10) = 4 micro lots
The ideal position size for a 50 pip stop loss is 4 micro lots, where traders are willing to risk $ 20 in trading. Conversely, if a trader buys 4 micro-lots and each pip move is worth $ 0.40 ($ 0.10 x 4 micro lots), then if the trader loses 50 pips in 4 micro lots, he will be $ 20. Lose.

You can enter a mini lot-pip value to fit the formula to a mini lot, or you can enter a default lot-pip value to fit a standard lot. Please note that the value of pips may vary depending on the currency pair being traded.

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