KOG - Lot size guide

27 Agu 2022

Account size/Lot Size

THIS IS A GUIDE ONLY

Less than £500:
LOT SIZE – 0.01 with a MAX LOT SIZE OF 0.03 AT ANY GIVEN TIME - You need to pick your trades and pick your entries carefully. Your risk needs to be low, however, a 0.01 lot size will give you flexibility when the market goes against you.

£500 – 1000:
LOT SIZE – 0.02-0.03 with a MAX LOT SIZE OF 0.06 AT ANY GIVEN TIME – You need to pick your trades and pick your entries carefully. Your risk needs to be low, however, a 0.02-0.03 lot size will give you flexibility when the market goes against you. Split your entries and take partial profits along the way until your target is reached. E.g Enter 0.03, when you reach 10-15pips take 0.02 in profit and set the stop to entry, let 0.01 run to the target with the trade protected.

£1000 – 1500
LOT SIZE 0.05-0.07 with a MAX LOTS SIZE OF 0.10 AT ANY GIVEN TIME - You need to pick your trades and pick your entries carefully. Split your entries and take partial profits along the way until your target is reached. E.g Enter 0.05, when you reach 10-15pips take 0.03 in profit and set the stop to entry, let 0.02 run to the target with the trade protected.

£2000+
LOT SIZE 0.05 – 0.15 with a MAX LOT SIZE OF 0.17 AT ANY GIVEN TIME - . Split your entries and take partial profits along the way until your target is reached. E.g Enter 0.07, when you reach 10-15pips take 0.05 in profit and set the stop to entry, let 0.02 run to the target with the trade protected.

Too many traders get stopped out and blow accounts because their lot sizes are too big. A small reversal on the pair and panic sets in because a high percentage of the account is in drawdown. They take the loss and the market ends up going their way in the end. This is not the way to trade! You will make money but ultimately you will face huge losses on your account. The market is designed to play with your emotions and your greed, you need to use this to your advantage. The only way to protect yourself is money and risk management, it’s a fundamental tool and skill required to trade.

Illustrated is a guide on lots sizes in accordance with different accounts sizes. Too many new traders are trading with large lot sizes that don’t correspond with the size of their accounts. This, together with the wrong risk model is one of the biggest reasons traders blow accounts and then give up on trading. They trade to get rich for the day, not concentrating on the pip capture or the ROI on their accounts. Small lots build accounts, this is not a get rich quick scheme, it’s a marathon, not a sprint as they say.
Smaller lots build accounts, this is no secret. Lot sizes in accordance to the account size allow you to be flexible in the markets if they move against you, they allow you to think and make a plan whether that be to stop out the trade or to enable yourself to trade out of the negative trade.

Some tips:

DO NOT take a trade unless you have a plan to manage risk

DO NOT take a trade unless you have worked out the correct lot size to use in accordance to your account size. One bad trade can wipe out months of hard work!

DO NOT marry the trade, if it goes against you, you should have a risk model in place that protects your account against big losses

DO NOT marry the bias of the market. Markets go up, markets go down. They never go in a straight line so be flexible and move with the markets. Trade what you see, not what you want to see!

DO NOT trade with money you can’t afford to lose.

Let your winners run and cut your losers as soon as you can.

Using tools like lot size calculators which can be found online can help you identify the correct lot sizes for your accounts, this is something all new traders should be doing.

Most of the above is going to be obvious but hopefully it will help some of you out there.

As always, trade safe.

KOG