There are many people who trade in bigger position sizes. The reason behind it is to make a lot of money. When the position size is set too big, the risks also increases with the profit. The people only see the reward part but ignore the risk?s part. This article will provide some knowledge why a bigger size is better to avoid even if the volatility is in favor. Most traders need to know this because losing money is hard to recover. Read this article and it will give you some reasons why professionals choose to trade with a smaller size.
Many new traders often think the pro-UK traders have a huge amount of money in their trading account. Due to this very reason, they are able to lead their life. In the past, things were a little bit hard in the Forex trading industry, but things have changed a lot. Well, reputed brokers like ETX Capital is now offering high leverage trading account which allows the traders to trade with big lots. Always remember leverage trading is like a double edge sword.
It increases the risks on the investment
The industry is risky and the volatility can change at any time. Even the seasoned traders make mistake to find the right volatility. When a big position size is selected, it significantly raises the risks. Imagine a trader who has $10 in the account. If the position size is changed and set at a bigger position, it will increase the risks and even small pips change will result in a loss that can exceed the initial investment of 10 dollars. The professional traders have thousands of dollars in the account but when the positions size is changed, they also face the same risks. Instead of losing $10, these people can lose thousands of dollars. The goal of trading is to make a consistent profit and this idea is an obstacle which is in the development. If necessary, use the spread betting demo account to learn more about this market.
In the early days, trade in the smallest size
At the beginning of the career, it is the holy duty that traders do not change the position size. Try to set it at the lowest level and the risks will be reduced. Novice traders are curious and experiment with the platform. The demo account is given for that purpose and do all the experiment in the demos. Before achieving consistency, it is advisable that position size is not changed. Do not follow the groups because there are chances of going in the wrong direction. The novice people are supposed to make mistakes and changing a thing in the platform can affect the performance.
When can I change the sizes?
It does not depend on the time but on the experience, skill, and success. A trader who has started recently but has gained much success can change the position size to know the different effect on his performance. It is better if the change is made in the demo account at first. Any change in Forex has a different effect that is hard to predict. A small change can advance the strategy thousand steps ahead or make it a suicide plan. When consistent profit is coming in the account, the skill has increased and success is becoming common, people can think of changing the size. Start from a small change as it will increase the risks also.
Do professionals also trade in small size?
No, these people are the professionals and they take all the risks. Do not get inspired by their risks because they have a big amount of money in their account. If the trade goes wrong, they only suffer a small loss but it can end the career for most traders. Only occasionally the position size is changed to avoid the risks, not all the time.