So yesterday I showed you the the compounding spreadsheet and hopefully you have had a chance to play around with your own numbers. If not remember you can download the spreadsheet and do so.
Today we are going to explain lot sizes, pips and how to get set up to trade with a broker and the trading software – sounds like a lot but it’s pretty straightforward when we break it down.
Let’s run through the set up so you can see all of this in action –
Lot size – simply how much each pip is worth
Leverage – how much you can magnify your trading money in the markets
Risk management – simply how much we are willing to lose on a given trade. In most cases our aim is to potentially win more than the amount we can potentially lose!
Stop loss / profit – you set the price at which the trade will automatically close if goes the wrong way
Take profit – the price you set at which the trade will automatically close to lock in profit
Metatrader 4 (MT4) – simply the method we use to place trades with our broker
Broker – think of it as a type of bank account but one that can talk to the markets for us to actually buy and sell the currency
FREE RESOURCE – you can use this handy little tool to work out what lot size on any given trade – https://www.myfxbook.com/forex-calculators/position-size
Recap – I have shown you why so many people are turning to Forex as a way to add extra income and even see it as their way to make a living. We have seen how to work out our lot size so we have proper risk management and can grow our accounts sensibly without putting them at risk. Today we looked at how to get set up with the foundations we need. Tomorrow – we start looking at how to decide when to take a trade – see you there!
Can’t wait . .