An Overview of Online Trade and How to Calculate Lot Size in Forex

Online trade has evolved into a convenient way of conducting business, involving the buying and selling of goods or services via internet platforms. With its innumerable advantages and wide range of opportunities, it has been adopted by numerous consumers and businesses worldwide. Among these numerous forms of online trade, Forex trading has gained significant attention due to its distinctive nature and promising paybacks.

Forex, short for foreign exchange, is the marketplace for trading all the world’s currencies and is the largest financial market globally. Online forex trading is a form of online trade where currencies are traded against one another. In other words, you are buying one currency while simultaneously selling another. This is done in pairs like EUR/USD, GBP/USD, etc.

As an aspiring or seasoned Forex trader, it is vital to understand the concept of a ‘lot’ in Forex trading. A ‘lot’ simply refers to the size of your trade. When you’re trading Forex, you will always trade in a specific quantity, known as lots. By definition, a lot is a standardized quantity in forex trading, and it comprises 100,000 units of the base currency.

Although standard lots are the most commonly used, there are also smaller lot sizes available which are suitable for those getting started with Forex trading. They are:

• Mini Lots – 10,000 units of base currency
• Micro Lots – 1,000 units of base currency
• Nano Lots – 100 units of base currency

Choosing the right lot size for your trades has a direct impact on the risk you’re taking. So, how do you calculate the right lot size for your trade? This is where the idea of ‘calculate lot size Forex‘ comes in.

To calculate lot size Forex, you need to understand the relationship between risk, trade size, and stop loss. Here is a simple three-step process:

1. Determine the dollar amount you are willing to risk.
2. Divide that amount by the stop loss in pips.
3. Thus, the result is the lot size you should be trading with respect to your current level of risk tolerance.

Calculating the lot size in Forex before placing a trade can mean the difference between a successful trade and one that jeopardizes your trading account. This calculation is one of the keys to maintaining a balanced risk management strategy and ensuring your longevity as a forex trader.

To conclude, the advent of the internet and online platforms has made Forex trading more accessible to the masses. However, the convenience that online trading offers does not diminish the need for strategic thinking and careful calculation, especially when it comes to determining lot size in Forex trading.

Investing in foreign currency, often synonymous with forex trading, has grown in popularity over recent years as an investment strategy. This comes as a result of improvements in technology, which have made the forex markets increasingly accessible for retail investors. Understanding the intricacies of foreign exchange markets is key to success in this field. This article will guide you on how to take the first steps when investing in foreign currency.

Understanding Forex Trading

To invest in foreign currency, you first need to understand what it entails. Forex trading involves the simultaneous buying and selling of global currencies. Profits are gained from the fluctuations in the exchange rates between these currencies. A deep comprehension of factors affecting the rates is necessary for making sound investment decisions.

Beginning Your Investment

The first step to investing in foreign currency is to open a forex trading account. This requires selecting a forex broker, which is essentially a company providing access to platforms that allow you to buy and sell currencies. A good broker should be regulated, reputable, and offer a platform that suits your trading style.

Developing a Trading Plan

Just like any other investment, forex trading requires a plan. This should be designed to guide your trading activities based on your capital, tolerance to risk, and investment goals. It is prudent to include in your plan; the currency pairs to trade, the amount of capital to dedicate to each trade, and the criteria for entering and exiting trades.

Understanding Margin and Leverage

Forex trading involves the use of leverage, allowing traders to control large amounts of money with a small investment by borrowing from the broker. This means only a fraction, known as the margin, of the total value of a trade is needed upfront. However, while leverage can magnify profits, it can also amplify losses.

Calculating Lot Size Forex

A critical aspect of forex trading is determining the size of your trading position, commonly known as the lot size. The standard lot size in forex trading is 100,000 units of currency. However, brokers allow trading in smaller sizes, called mini, micro, and nano lots. Understanding how to calculate lot size forex is essential because it determines the level of risk you’re prepared to take. There are various online calculators or broker-provided tools for this purpose. They work by taking into account your risk tolerance and the amount of capital you are willing to risk on a trade relative to your total investment.

Managing Risk

Risk management is, without question, among the most vital components of successful forex trading. One common strategy is the use of stop-loss orders, which automatically close trades if the loss on a particular trade hits a specific level. Additionally, maintaining a diversified portfolio is advantageous as it helps spread the risks.

Continued Learning

To remain successful in the ever-evolving forex markets, continuous learning is indispensable. Stay updated with global financial news, continually review your trading strategy and learn from your trading activities. Joining forex trading communities can also provide a platform to share ideas and learn from other traders.

Overall, making money through forex trading is not an overnight process. It requires patience, diligent study, and disciplined investment. However, with a sound trading strategy, understanding of the market, and a commitment to gradual growth, forex trading can be a profitable investment method.

Submitted by: Dragan Lukic

In our last article, we discussed four traits which top Forex traders consider to be the difference separating consistent winners from trading losers. This article looks at some other characteristics which any new trader must take into account before delving into the world of Forex trading.

Firstly, think about all the successful businessmen and women, singers, footballers and anyone who has realised a significant amount of achievement in their industry. Chances are their success did not happen overnight. The likes of Richard Branson and Donald Trump did not build their empires at a blink of an eye. Most successful people have had to overcome some kind of failure and then learned from their mistakes before they finally reached their current level. Forex trading is no different. As a new trader upon the completion of your

Forex Trading Training

you must fully accept that losing is part of trading. No indicator or strategy will guarantee to make money on every single trade. The sooner you accept this reality the shallower your learning curve will be.

Another quality cited by great traders is the ability to take control and responsibility for every trading decision made. It s no good blaming someone else such as your broker or your trading platform for your own trading mistakes. Successful traders are able to take responsibility for their actions; both good and bad. By reviewing their trades and keeping a journal they can keep themselves accountable which is something consistent losers are too lazy to do. Furthermore, by being able to take responsibility, great traders do not feel the need to listen to outside advice or opinions before they take their trade. Can you imagine Warren Buffet or George Soros asking his broker for investment tips? Great Forex traders trust and have confidence in themselves and their system, which is the level new traders must aspire to.

Finally, great Forex traders are incredibly patient. They are patient before entering a trade, during a trade and when price reaches their profit target. Before a trade, most amateurs, due to a lack of a strategy, are constantly chasing the market and buying or selling because they can see price moving. Great traders do the complete opposite, they let price come to them – like a lion lurking in the bushes waiting to ambush its prey, professional Forex traders wait until the trade fits their entry rules. When their rules are fully met, because they are not afraid or have no fear of losing (due to sound money & risk management rules, confidence, and a profitable system), they take the trade. Once in the trade, they are patient to allow their edge to play out in the Forex market. Instead of getting excited every time price goes in their favour or upset when price approaches their stop loss, great Forex traders are patient. When price reaches their profit target, they have mastered techniques allowing to them manage the trade in order to capture much more than they were initially hoping for. They do not take quick profits or micro manage their trades like consistent losers will. If you are searching for a

Forex Trading Course

you must ensure that this is a subject that is covered or at least referenced as part of the syllabus.

In our next article (Part 3), we will explore further what top Forex traders consider to be the most important qualities which any new trader must develop before they can see consistent profits.

About the Author: Dragan is a trader and an expert on

Forex Trading Training

. Please visit the Forex Training Worldwide website for more details on our

Forex Trading Course

.

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Profitable Currency Traders – What Motivates Them?

by

James Woolley

Many people dream of becoming a successful trader, but why is this? Well I have been trading the forex markets for several years now, so I think I am in a good position to be able to tell you three of the main factors that motivate people to become successful forex traders.

The first is obviously money. The great thing about currency trading is that you can potentially make unlimited amounts of money. If you are successful, your account balance is just going to grow and grow, and obviously if you are risking say 3% of your account per trade, then you will make more and more money as your account grows. The beauty of all this is that you can start off with a modest amount of capital behind you, maybe just a few hundred dollars, and grow this into a sizeable sum over time. Of course it takes a large amount of skill to come up with a trading system that is able to achieve this goal, but it is possible because plenty of people have done it in the past. The second motivating factor is the independent lifestyle that is available to you if you are successful. Most of us hate working for someone else, but with forex trading you can easily work from home (or anywhere in the world that has an internet connection) and choose the hours that suit you. Some people find that they need to be watching every tick for around 8 or 9 hours per day in order to make money, whilst other profitable traders are able to generate profits trading just a few of the most profitable hours of the day. The point is that you have the freedom to choose the hours that suit you, once you have an established trading system in place. The final thing that motivates people to become highly profitable forex traders is of course the challenge. For some people the money that they make is obviously greatly appreciated, but it is the challenge of beating the markets that gets them out of bed each morning and eager to get started. The fact is that not many people are able to generate consistent profits from their forex trading. This can be said about some of the traders that work in the city as well. So to keep coming out on top is immensely satisfying and gives you real job satisfaction when you are essentially just working from home. So hopefully you can see what drives people to become successful forex traders. It is not easy by any means. If it was, then we would all be sitting on a deserted beach somewhere sipping cocktails. However it is definitely possible and you don’t need a great deal of money to get started either. You just need skill, discipline, motivation and a decent trading system.

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Profitable Currency Traders – What Motivates Them?