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Leverage is often being blamed by Novice Forex traders for losing money. It is being blamed so often that and they did not take a strategic moment to think what could be the problem really is.

For those who has no idea what is Leverage means in Forex trading. It is the amount of currency a trader can control relative to the amount of equity that trader possess in his or her trading account. Too complicated?

Let’s use an example:

Forex Brokers offer traders leverage 100:1. For each $1 the traders put in the broker account, they can control $100 to trade with. This amplify your profits and your loss, allowing anyone to trade with very little amount of money but reaping profits as if they possess large amount of cash.

Of course, when market go against the trader, the leverage will amplify the loss as if he or she possess that large amount of cash. The worst case situation will be the trader’s account will be wiped out.

Since leverage is able to cause us to loss so much money, even though we can make so much money from it. Why not reduce the leverage or demolish this function?

Let’s have another example and to ponder upon:

A trader has $10000 in his account. He trade with a $10000 lot size.

His maximum leverage is 10:1. The highest number of mini lots will be 6 if the trader want to buy GBP/USD.

Each pip would be worth $6 if they traded the maximum amount of GBP/USD.

The trader’s strategy is to have a risk allowance to 3% per trade. In this case, he is willing to risk $300 out of the $10000 on this trade. This also mean they wouldn’t able to risk their max amount unless the trade called for it’s stop to be at least 50 pips from the entry price.

$300 out of $10000? Big deal right? However, consider that the trader in the above example has already maxed out his equity. He isn’t able to enter another position until the current trade is closed. There are also a lot of other traders out there (including me) that has narrower stop loss than 50 pips in our strategy. If leverage is demolish entirely, the trader in the above example will have to distance of 500 pips from his entry price to stop loss to able to max out his 3% risk. This kills a lot of strategies.

It is easy to see that leverage is important as most strategies are using it to trade in the currency exchange. Trading will be very tough as there is no leverage to maximize all your trading opportunity. However, I don’t mean that you should get 1000:1 leverage and take as many lots position in your bank account. It isn’t strategically sound. In fact, it is suicidal!

But what is the true problem? The core issue for traders to become unprofitable? It is poor money management.

High leverage only reduce the amount of capital need to open a position. Trading with 100:1 leverage and 1000:1 leverage should not be any difference if you risk the same amount. The difference between 100:1 and 1000:1 is the amount of capital needed. 1000:1 isn’t riskier than 100:1 if you use proper money management.

Money management simply means that you should plan your entry and exit before making any trade. Only after establish the take profit and stop loss level, the trader then should set his lot size. The lot size should be adjusted so that the trader is able to risk the same amount of cash every trade.

If a forex trader plan his traders, risking the same small amount every time. Even with high leverage has no negative effect. But if we use very low or no leverage at all, it will limit everyone’s trading potential of success because most of the traders might not have enough cash to enter a position at all.

Leverage is not your enemy, nor is it your friend. It is a tool, like a double edge sword. Abuse it, it will cut you. Practice, learn from an experience teacher and you will wield this sword like a master. Learning, planning, strategize, and become a forex kung fu master.

I am sure for everybody, it is important to realize that in the Currency trading Market, there are many standards and ordinances. And some of them may differ another totally. Even so, this is the only market that running twenty four hours daily, 5 days weekly and most of the days in a year (sorry, I am too lazy to count how many days…) Thanks to that, many elements affect foreign exchange rate and many different forex strategies are needed to earn income.

So, does it matters how much those huge banks trade in the forex market?

Yes it does. The currency trading market is split into several grades of access. At the acme, 50% to 54% of all transactions in Forex market, are given to commercial banks and securities dealers. They possessed the best spread in the market. The reason why they are given this privilege is because they are trading extremely huge amounts of transactions, and each transaction can be a huge sum too.

Commercial companies and centrals banks enjoyed the next best privileges.

Commercial companies has a lasting impact in the long run compared to a short term effect. They may trade daily, but the amount is smaller compared to commercial banks and securities dealers. Even so, they still can impact the market. We should be also mindful of big commercial companies.

Central banks, they possess an advantage others doesn’t have. They have good flow of currency, thanks to their main role, it is extremely rare and hard for them to go bankrupt in the short term. Even so, they don’t trade as often as most currency traders. Their objective in trading is assure that money supply and Fx market is stable.

So, to answer the question “how much do the banks trade?”, if the daily trading volume is USD$4 trillion. Then Commercial banks and securities dealers are trading almost USD$2 trillion daily. With such good bid/ask spread, it wouldn’t be a surprise if they earning millions of dollars from Forex monthly.

There are some very important principles to track a very likely profitable trade. The essential component for choosing a trading opportunity are :

• low degree of risk
• big profitable possibility
• how secure the trade is

It is very wise for traders taking these measures into consideration before entering a trade. The better the trader can gauge his profitable results, his trading account can be very big in the long run.

Low degree of Risk

This level of risk varies from trader to trader’s psychology and the deposit he willing to put in. the two important aspects that trader will be tested will be:

1. His patience towards uncertainty
2. The amount of equity he has in his trading account and the amount he is willing to risk each trade.

The trader must realize that he may need to risk a small portion of his money. Therefore, you need to be mentality prepare to risk this certain amount of money. That is why you should assess the risk factor, figure out whether the trade will bring profit or otherwise, before you go in and take the risk. The best opportunities give the best risk to profit ratio. To look deeper of the risk to profit ratio analysis, it should be measure potential risk with potential profitability. Also look at the chances of achieving it and the time take for it.

When it comes to money and investments, there is always risk. Just like life is always accompanied with death and taxes. As best trading opportunities gives good risk to profit ratio, time is also another factor traders should put in consideration. For example, if the trader has a day job, he has no time to stay whole day in front of his computer. For him, he should avoid intraday trades. Traders need to take their time to make their forex trading decisions. If the traders rush to make a trade, the results may not be pleasant. If the trader does not have time to follow his trades, which need attention and management, he will most likely lose money. The best trading opportunities should matches the trader’s time schedule.

In currency trade, putting more money than you can afford to lose will causes unnecessary stress which will make you make terrible decisions. Not all traders can handle this tension. Do take note that it is important for you to measure your own level of tolerance on risk. The longer you trade, the more experience you will have. And more experience you have, the higher the level of tolerance. However, bear in mind this does not mean you can forgo money management.

If you notice something odd, or if you do not understand any characteristic of the trade. Avoid it. You should always be aware of the trades you make. Money and forex are like a relationship, avoid casual sex with strangers and have a faithful partner. This greatly reduce your risk of contacting HIV or STDs. Similarly, to be profitability in trading forex, you have to be constant earning profits in the long term using one tested proven money making strategy. Just follow the rules the strategy gives and you will be safe from ‘HIV’ losses.

Die, die must never forget your money management rules. Don’t be too happy because when you have a few successful trades and it will blur you mind. Just 1 single and simple mistake can wipe out a series of profitable trades. What a waste of money and time

One of the key elements in successful Forex Trading is Trading Psychology. There are many factors that components that help to a trader’s psychological makeup. There is also no easy method to achieve the mentality of a Successful Forex Trader. There are also certain factors that influence a trader’s psychology which we should be aware of. One of these factors, is Acknowledging and Accepting the Risk in Forex Trading.

The best Forex Traders are the most consistent traders. To become a consistent trader, it is very important to always apply a methodology to the market and make as few errors as possible. Usually a trading error happens when the trader does not follow his or her methodology. A commonly happened trading error is taking a bigger stop loss than planned or exit a trade faster than what is planned before hand. Taking a trade that does not fit the trader’s usual requirement or does not take the trade when the trade fit the trader’s requirement. These example of errors can really wipe out the trader’s Forex account very fast. It also drive him or her insane…

Such Forex Trading Errors are usually caused by emotions created by previous trades. The most serious emotional catalyst , in my point of view, is when the trader made a trade which they had high confidence in it and then the trade turns sour. After this bad trade, the trader feels sad, angry or maybe revengeful against the Forex market. This causes the trader to trade illogically and irrationally and make a weak attempt to win back the money he or she loses previously. This type of trade usually cause him or her to lose too. However, if the trader profit from this trade, the trader will become misguided as he or she will always attempt this method of trading when he or she loses a trade. This will result into even more losses.

The reason why this situation has happened is because traders does not willing to accept the risk when they placed the trade. Thinking that every trade they place will become profitable, so when they were hit by a loss, they become bitter. It is alright to feel the bitterness, however, when you do feel anger, sad or revengeful. Don’t Trade anymore. Stop, go to the mall, buy an ice cream, play with your children. Do something that makes you feel better and go back and trade with the right emotions.

Treat the losses as a form of expenses. An school fee to learn and found out if the forex strategy you craft out works. Once you accept the risk, you will feel less depressing when your trade lose.

Easy as it sounds, however accepting the truth about the risk in each trade is really not easy. Especially to the inexperienced and new traders. However at Whizforex.com, we craft some steps for you which makes it easy for you to accept the risk:

• Plan out each of your trade

• Know when to enter the trade

• Know where to place your Stop Loss level

• Know where to place your Take Profit level

Yes! And I believe you know this already! But why are we talking about this again?

This way, you think more clearly before you enter the position as your organized the information for your brain to see. Once the trade is entered, your brain will perceived the information differently too and you will know the distance between the entry, stop loss and take profit level.

At that point of time, you will know exactly how much money are you risking in that trade. This is incredibly important as you need to know how much you are risking then you are able to accept the risk.

After entering the trade, emotions is unavoidable, however it won’t impact the result the trade as the trade is already made.

A Forex Trader must accept the risk involved and must view the amount of money they risking as an expense. If they don’t, they never know if their strategy will work or not. Even Successful Trader has losses. They too, view losses as a necessary part of trading as there is no one in the world will know if their Forex trade will win or loses when the trade is being entered.

Once we accept the risk, the correctly mentality. The losses can be easily view as a part of trading experience instead of a personal attack from the Currency trading market. The trader also surrender to the fact that he don’t know if the trade will win or not. This gives him more control to his emotions and achieve consistent results in Forex Trading.

When I started trading, I was looking the forex chart at the time frame of 15 mins. After a few days. , I went to 5 mins chart, then back to 15 mins chart… My strategy then was earn 20 pips daily and trading using the support and resistance lines. I was thinking, “hey! Earning 20 pips must be easy man! Everyday the market move more than 20 pips, so it shouldn’t be a problem hitting my take profit level!”

I have forgotten one thing also. It may be extremely easy to hit my take profit level, but it is also extremely easy to hit my stop loss level too.

After hitting a series of loss trades, although it is just a demo account. I can still feel the pinch… I want to be financially free, not financially embarrassed. And from the looks of it, I am going to be financially retarded… So when a student has problems, where do go to? To his mentor. I am very luckily have Huang Yong as a mentor as a just a sms, we arranged a time to meet up and discuss my series of loss trades ‘flu’.

He changed my perspective on the time frame chart.

He pointed out what isn’t optimal with my initial strategy:

• I am trying to be a ‘day trader’ but I don’t have the time to do it, thanks to my job.
• Small time frame charts needs a lot of attention and I have other commitment to fulfill. (For example, this blog)

However, during the discussion, I voiced out that these factors doesn’t suppose to affect my trading, if the strategy or system suppose to work.

He shook his head and explaining further, “These System and strategy may work for others, because they have the time, resources, and most importantly the right state of mind to use it. You need to use other strategies that gives you a different benefit and more leeway due to your time and commitment needs.”

Seriously, I don’t fully understand what he means. Even up to now… However, I am sure of one thing, doing the same time and expecting the different is insane. So I ‘pretend’ I understand (hope he never read this part) and go along the flow.

“Now, just change the time frame to 4Hr chart and do the same”

“Huh? So big ar? Why?”

“Aiyo~~ Why you ask so much? Try first la, I ask you to do things got reason one la. You try first, experience first than you understand more.”

Right now, although I don’t really the way he is going, but I have to trust him. He does has a point, experience is irreplaceable.

After a week, we met up again.

“So how? What you think of using a larger time frame chat.”

Then I told him what I found out, he nodding his head in agreement.

Bigger time frames’ advantages are they let you see the market in a boarder view, showing reliable trend lines. I started as small time frame chart like 15 mins and 1 hour, aiming to earn money DAILY, which means I been playing the clicking game.

“That’s right, however you probably didn’t notice some other advantages you have already leverage on but didn’t notice.” Huang Yong trying to supplemented more to my learning.

“Larger time frame charts also can act as a filter. There is so much movement in the forex market, which much of them does not give any meaning at all. Those movement are what I called ‘noise’. However, monthly chart has less noise than a weekly chart, so is a weekly chart has lesser noise than a daily chart, etc etc.”

“Making your judgment based on noise is dangerous. So, larger time frame shows what are the major trends, right?” I am trying to figure out where is this going to take me to.

“Of course la. Smart la you.”

He carried on and pin out that no matter what trading strategy is used, the entry point in the currency market using the higher time frame is more dependable than smaller time frame. One hour time frame and below is usually very unreliable and it is extremely not recommended. Experience, again, play a role. Because we need to know what works for us or not. With experience, we can develop a trading plan with more particular entry and take profit levels.

“It isn’t that to say small time frame chart does not earn money. There are a lot of traders making a lot of money using small time frame chart strategies. It is just that taking that path is simply more intense and does not really allow any traders that still need a full time job to maximize those strategies’ fullest potential.

“Last but not least,” Huang Yong finalizing the lesson, “since you just start up as a trader, you should concern yourselves with large time frames like 4 hourly and higher charts. Once you profit often from these charts in the forex market, you really can achieve financial independence. Just remember that small time fram charts’ signal isn’t really reliable.”

Last blog post, we discuss on trading Forex with the news. This blog post will discuss how to handle an open position when there is a major news that is coming. Before we carry on, I would like to make clear that there are some forex strategies wouldn’t be that ideal for this plan . This blog post is meant to show you how important to have an idea what to do with a forex open position when there is a major news going to announce.
Do bear in mind that major news are relevant here. We also care about the announcements that affect the currency pair that you are trading then. For example, a Greece’s debt issue wouldn’t affect my USD/JPY open position.

Does it matter? I mean we learn the importance of having a stop loss and take profit levels and and apply it. We have money management. So what do we suppose to be afraid of?
Major news affect the forex market a lot. I do really mean A LOT. Here are some examples that show how these major news announcements can create more risk than usual for you when you are trading forex market.

Example 1: The position is not profitable anymore.
Generally, we suggest to leave the position on. However, if the trade is 90% on the way to hit stop loss, close the trade. The reason is that when the news is announce, it could create a gap. If the gap go beyond the stop loss, resulting in losing more than what we can risk.
Otherwise, leave the trade on, and see what might happened.

Example 2: Your Open Position is even.
In this case, just leave the position as it is. However, there are a few things you should consider.
One, if you think there is a chance the news could gap beyond your stop loss. Close the trade, since you didn’t make a loss or profit. This is extremely rare, and usually apply by traders whom trade short term.
Two, if the original pattern does not seems to valid anymore, close the trade. Because the original reason why you make the trade does not exist, it doesn’t make sense at all to carry on.

Example 3: Your Open Position is profitable
Let’s revise the other two examples we talk about just now.
The first example, your trade is most likely going to hit stop loss, but you might get lucky if the news goes in your favor and win if you stay on.
The second example is extremely rare, but staying on still pose some benefits.
Now, on the third example…
Let’s say your trade is 50% to your target. Or maybe farther…
As we all know, news is totally unpredictable… As for now, you are the winner. But after the news announcement, the market changed and might hit your stop loss.
Oh bugger…
So, I am suggesting that since there is profit at your opening trade, take it first.
Of course in this example this is very subjective. If you holding 30% profits, I really think you take the profits. If it is just 10% profits. Why not stay on?
Bear in mind the risk to reward ratio. If you are risking a lot just to earn just a bit more, I guess taking the profits sounds logical.
Remember this also, news dismiss forex technical analysis in a lot of case…

Conclusion
Ask yourself questions like “What are the odds that the pair is moving up or down?”
Of course, even with these thoughts helping the forex strategy you have, it is still very grey area that you will have a lot of different ideas. Some of them may even contradict each other.
The simplest way is of course ignore the news after you enter the trade.
However, if you follow those guideline I suggested, I am sure your forex results will improve a lot whenever there is a major news announcement coming your way.

Trading Forex with the news is very unpredictable. Personally, I don’t like unpredictable and irrational events. Not just in Forex, but anything in life. It makes me feel stupid. So my best defense against irrational, unpredictable events will be stay away from them. I mean, will you like to take a lift from a drunk driver or a flag a sober taxi driver? No matter how good that driver is, being drunk doesn’t mean you can do things better…

So, the basic strategy to deal with major news is to Avoid Them. When it comes to news, there is a “forecast” and a “previous” number listed before the news is announce. The trouble lies in the assumption of the Forex traders will respond the same way the relation between the actual number, forecast number and the previous number. It will be extremely hard to make any trades during this period of chaotic time because the forex market is moving too fast.

In my point of view, these announcements have few long term significances and extremely unpredictable in the short term. Some Forex traders may achieve some profits using these figures. However, I have yet to heard or read any success stories that you can profit with these announcement figures in the long run.

One thing that is constantly happening when major news has been announced. The extremely fast price movements. These price movements can be so unpredictable that it looks like it going to be one direction but it goes back the point where it all started just as fast.

These price movements are so irrational that they totally ignore the logic of the news itself. The movements also brush aside the logic of the technical analysis we learn. To simply put it, news makes traders to become irrational. Take note the timing of these major announcements and do not place any trade before these announcements.

Wait till the pattern completed farther away and the market has calm down to enter any trade. If you have make any trade before the news announcement, it will be wise to close it before it comes out, hopefully with a little profit. Trading with the News is simply too risky.

Unpredictable. That is the only word we can describe today’s economy. However, it is this unpredictability that allows Forex Traders to profit no matter the situation. Forex market provides one of the most remunerative advantages for you because it is transparent and highly liquid. Even so, it is extremely important to learn how to trade in Forex market as it really need a lot of strategy, planning, discipline and management.

In this globe, Commercial banks, investor firms (be it big or small) and individual forex traders are trading in the forex market. You will need a internet forex broker if you wish to trade currency at the comfort of your home. The primary objective of foreign exchange is to make a profit by find out if one currency is going to grow or shrink in value against another currency. For example, Euro against USD dollar.

Like driving, learning how to trade safely is extremely important. Thanks to the extremely volatility. Here are something you need learn first before you start trading:

Technical and Fundamental analysis

Technical analysis traders depend on past price, resistance lines, charting and indicators to decide the timing to buy or sell a currency pair. Fundamental analysis traders uses economic and world events to buy or sell. Both has their merit and if you want to be a great forex trader, you need to know both side of the analysis. It is like the ying and yang symbol. One need another to be complete.

Trading Strategy

Research and found a trading strategy so that you can trade profitably in forex market. When you read a forex trading strategy, ask yourself these two questions, when to trade and how to exit from the trade.

There is a saying in the Chinese 36 stratagems, “Of all 36 stratagems, Self Preservation is the top propriety”. Learn not how to make money, but also protect your money too.

Risk to Reward Ratio

Are you willing to risk to lose $1 to profit $1? If yes, then your risk to reward ration will be 1:1. there are others that willing to risk $1 to profit $2 (1:2)

However, you should never risk more than what you can profit. For example 2:1. Because in the long run, your profit will not able to cover your loss.

Establish a goal

We are trading forex for a sole purpose: profits. However, there is more than just money. Have a goal that you wish to achieve by having more money. This is my goal: I am trading forex to achieve financial freedom so that I can spend more time with my family.

What is the purpose of having a goal? There will be times that you will be feeling terrible. Experience a lot of horrible events. This will be causes you to give up, not just in forex trading, but anything in life. Having a goal paste on your wall, you will be reminded by the reason you read this blog.

Cheers!

This method is often use by a lot advanced forex traders and they make a big loaf of money from their FX trading. This method may a bit hard to digest at first, so read as much as you can. It can really help you make more money from forex by just 30 minutes a day.

But before we look at this method in greater detail. I like to bring your attention to an online industry which trying to educate the public that Forex market can be predicted. Since the Forex market can be predicted, this industry create a software or a number of programs that trade for you and make you money automatically. All you need to do is to buy these software, install, let your computer run, and you are on your way to become a millionaire.

If only that is so true, so that no one will be working for their rice bowl and dough and we need to change the world richest man list.

The fact is we can never predict the Forex price and the market. If it is predictable, it will not be that profitable, or it will be extremely overprice. Just look at bonds and Berkshire Hathaway ‘s share price.

Forex is unpredictable: How do we make money out of Currency Trading?

Simple, trade the odds. You just need to trade charts that has high probability and set ups. Moreover, this Forex trading strategy is riding on big bull or bear trends which breaks new charts high or low.

Just look at any currency pair and you can notice that whenever a trend start and continue, all you need to do is buy or sell those breakouts and you have a good odds of success in your favor. This is of course result in profits.

Breakouts- Which ones are the Best to buy?

All you need to do now is to look for several test before the breakout. This is where the resistance or support line has hold it’s ground and it has been tested many times but still hold. Look out for two of these test in a month or how long are these two test on the support or resistance. The wider the time frame in between the tests, the better the odds of breakout the support or resistance.

What you should do when it break out?

When the market starts to trend, you can start to trade those breakouts. It may seems simple, yet it can generate a lot of money. Risk is low as your stop loss, just put it below the price the level it broke. Trends like these last for weeks, maybe months, making these breakout trades extremely profitable.

Looking on support and resistance levels is sufficient for this strategy. Just use a few trading indicators to time your move and to check your price momentum. If these are in your favor, you will have a forex trading strategy that can make a lot of money for you in just 30 minutes a day.

“Buy when the price is the lowest, when it goes up. Sell it”

Sounds familiar? This is the same common advice I keep hearing for uneducated Forex traders wannabe. Nothing wrong with the advice. Be it long or short, that is what we are doing all the time. However, the questions lies in “How do I know that is the price to go Long/Short?”

Much of the time, these uneducated Forex traders will say, “Oh! Just look at the chart. It is really easy to see the lowest price.”

My guess is they don’t know what they are talking about.

Earning money from Forex can be easy. Like chess, games and business. If you plan ahead, Forex market can really help you earn money effortless. How hard can click and typing a few numbers be, right?

However, there are a few reasons why currency trading can be difficult for new traders. They have to realize that their emotions are playing a part in their trading too. They may perform well in demo account but emotions ran amok when real money is on the line. And to make matter worse, most of them has no trading plan in begin with.

Every Forex book I read, every Forex blog I come across, every trader that trade forex successfully teach me one thing in common. Please built your Freaking Trading Plan! They do the same thing every time! Once in a while, they do fine tune their plan. They have to tune their forex trading plan once in awhile because by change every aspect of the currency trading plan at once you never know which works or not.

Reason for the Trade

Bear in mind that one of the purpose of a trading plan is ensure you keep your actions against your emotions.

Before you enter a trade, ask yourself “Why do I make this trade? Is because of some indicators telling me the market is going this direction? If not, am I making the trade solely on ‘gut feeling‘ ?”

Of course, with indicators and chart patterns, you back up your trading with a reason. This make your trades more strategic.

Without indicators or chart patterns telling the direction of the forex market is going, your trades are based on feelings. This is gambling. I have yet to meet a gambler that profits consistently without a strategy. Yes, professional gamblers gamble with strategies and reason. This make their gambling more like a business than a stroke of fate.

Identify your Exits

It is very important that before you enter any trade, identify your entry price, stop loss and profit target first. If you do these after you entered your trade, your emotions will hinder your view of the information. If these exits are planted along with the trade, you will have more discipline to stay on your forex trading plan. Of course, another advantage you gain is that you don’t have to stare at the computer every hour to make your exit.

Know your Risk : Reward Ratio

It is also important to know your risk:reward ratio. This amplify the power of your planning. You can’t determine your risk:reward ration without planning your stop loss and take profit target. It just can’t be done. To assess your risk:reward ratio, just divide the number of pips between the entry price to take profit price by the number of pips between the entry price to the stop loss. ok… I know this is kind of wordy, let’s use an example.

Example

Long EUR/USD: 1.3585.

Take Profit: 1.3600

Number of pips to Take Profit: 15

Stop Loss: 1.3560

Number of pips to Stop Loss: 25

Risk : Reward ratio = 25 / 15 = 1.6 : 1

In this case, the risk is higher than the reward. Most of the traders does not think this is a good risk : reward ratio as it takes 2 successful trades to recover 1 loss trade. If your forex strategy has 50% winning trades, you will lose out money in the long run.

Plan your Position Size

Once all of the above are done. You can determine your position size. Your position size should be the same percentage of your money in your account in every trade. Most forex traders trade one to three percent of their equity each time. This make your all your trades weighted equally. For example, if you risk $100 on a 30 pips stop loss, you should also risk $100 for a 300 pip stop loss.

So, to find out your position size:

1. multiply your total equity by your risk (usually in 1 to 3%): this is the amount of money you should risk per trade. Let’s call it X.
2. multiply the number of pips between your entry price and stop loss by the currency’s pip value. Lets call this Y.
3. draw a line from your entry price to stop loss using the value calculator to get Y.
4. Then divide X by Y. this is the number of lots you should trading.

Conclusion

This method is very easy to follow. Everything is planned out, all you need to do is to fill in the blanks like your total equity and percentage that you want to risk for each trade. Planning your forex trades before you enter makes your trades more consistent and less risky.