How to choose the best risk?
Chosing a proper risk is very important for successfully trading Forex. The chosen risk determines your account's profit and loss. Many traders experience difficulties in choosing a risk. On many occasions, higher risk means higher profits. However, let us not forget that it may also lead to higher losses.
The official recommended risk for Forex Diamond is between 1% and 5%. In this case, the Money management system should be activated. Its advantages are as follows:
- the robot adjust automatically the lot size. You are not required to make any manual calculations - the robot does it for you.
- the robot eliminates the opportunity of a trade being opened with wrong lot size. Each broker has restrictions on minimum and maximum allowed lot size. The robot has an integrated system that takes these restrictions in consideration. Thanks to this system the risk to miss a trade is zero.
Here is some information about the lot types:
A micro lot usually is the smallest position size that you can trade with. Micro lots are very good for beginners who don't have much capital in their pocket. A micro lot is a lot of 1000 units of your accounting base currency. For example if you trade USD based pair, 1 pip would be equal to 10 cents.
A mini lot is 10,000 units of your account base currency. If you are trading on USD based currency pair, 1 pip would be equal to $1. If you want to trade with mini lots you should have at least $1000 account. Have in mind that 100 pips loss is equal to $100. Sometimes the market moves quickly 100 pips even more in one direction.
A standard lot is a 100,000 units lot of your account base currency. The average pip size for standard lots is $10 per pip. Standard lots are for big accounts.