The volume of the transaction, which is concluded on the Forex market, is determined by the so-called lot. A lot corresponds to a value of $ 100,000 (if the account is opened in this currency), but often the position can be opened in 0.1 lot (often the minimum value). Thus, to enter the market, you will need at least $ 10,000.
At the same time, the broker will not incur losses for you if the price goes against the position, so you will need at least 20,000 to open a transaction in 0.1 lot without a leverage. At the same time you will enter 0.1 lot, risking half of its deposit, which is not invested in any framework of money management. That is why only banks and large credit or other organizations, national banks and other regulatory organizations are engaged in direct trading in the foreign exchange market.
Individuals who have access to the market through brokers use the so-called leverage. This means that part of the funds is provided by the broker on credit until the transaction is closed. As soon as the position is closed, the broker will take away both his credit funds and the transaction fee.
Determination of transaction volume
The use of 1: 100 leverage allows you to enter the market with a 0.1 lot (in the amount of $ 10,000), spending only $ 100. But it should be borne in mind that along with the increase in potential profitability (which will be considered at $ 10,000), the risks will increase significantly.
Therefore, in order to correctly determine the available volume of transactions on Forex, you need to take into account what leverage we provide you with a broker (as a rule, it can be 1: 500, 1: 100, 1:50, 1:20), currency a couple, the potential risks in its movement, the possibility of losing a certain part of the capital. In a single transaction with a conservative trade can not lose 3-5% of the deposit, and with aggressive – 7-10%. That is why you should enter the market only when you have a reliable signal, and set the stop loss level not only on the basis of technical analysis data, but also from your money management system.
With conservative trading on a long time interval, you can enter the market with a minimum lot and hold it for a long time to pass a large number of points. With aggressive trading on a short timeframe often use large lots. This allows you to quickly make big money, but at the same time implies huge risks.
Thus, the volume of transactions in the Forex market should always be determined on the basis of its own trading system, money management and risk management approach.