How to double lot size correctly | Forex Factory

Options

Permalinks
Print Thread

Similar Threads

Which would you prefer: increasing lot size or TP size? 24 replies

At what lot size/account size do you have scale issues? 39 replies

Point equivalent is calculated with the account size or traded size? 4 replies

Lot size, contract size, max position ? 1 reply

BUY run profit 1 lot, SELL LIMIT 2 LOT down again n BUY 1 lot - EA Reqd 5 replies

How to double lot size correctly

  • #1
  • First Post: Oct 9, 2020 3:38pm Oct 9, 2020 3:38pm
Hi All, I'd like to know if doubling the lot size doubles the risk (including profit and loss) OR whether it increases it by 4 !

I read somewhere that if you increase your currently traded lot size then the risk doesn't get doubled but instead it quadruples. Is that true?

Whenever I double my lot size (after a long and successful run with a specific lot size), hoping to follow my now successfully established strategy to double my profits, I get blown out in half the time!

So, for e.g. If I'm currently trading at a high enough lot size ( for me, at least because leverage is very high ) of say, 0.25 lots, then if I want to double my profits should I change my lot size to 0.50 or 0.37 instead? I ask for whether 0.37 is correct presuming that doubling the lot size quadruples the risk, so (0.25 + 0.50)/2 = 0.37 is the correct lot size to use if I want to double my profits ( and losses )

Sincere thanks!
  • #2
  • Oct 9, 2020 4:44pm Oct 9, 2020 4:44pm
hi dmfx
i saw from your profile that you joined FF since 2008, where by, i should expect that you are well experienced in FX trading to know that lot size is directly related to your account size and not available leverage offered by brokers. if you have tiny account you can not increase your lot size with out taking this into consideration.
MM is the most important issue in trading, most of losers blowing their account because they are not discipline to specific wining strategy.
good trader is the one who can control, mange, and knows where he should stop, or where he should profit .
  • #3
  • Oct 10, 2020 7:57am Oct 10, 2020 7:57am
Thank you Khaled2259,

I appreciate your pointing out about the importance of MM. True, that's why I blow my account: bad MM.

However what I've noticed is I can double my account with a small enough lot size, but it takes a while.

Then if I double my lot size ( say from 1 lot to 2 lots ), I get blown out pretty fast even though I follow the same strategy

Somehow, to me the factors involved don't just double, but quadruple instead !

My intention is simply to double the pace and profits every time I double my account.

Or maybe I just don't know what I'm talking about,
Thanks anyway!
  • #4
  • Oct 10, 2020 8:36am Oct 10, 2020 8:36am
Hi dmfx
I think your strategy is not proper to grow up your account, I guess the best indicator you can have is your eyes.
in some of my lectures to forex students, i used to ask any of them do you speak chinese, and the answer was always no, then my second question
is how could you be able to speak chinese, the answer was by learning chinese language. you should consider the charts yuo see as language, you
have to learn how to talk and write and speak this language, you need time pacience, and of course experience, other wise you will keep blowing accounts.
always check your concept then see the details, if the concept is wrong all after will be useless, FOREX trading is a concept, and the chart is the main tool, and your eyes are the ones leading you to proper way after of course all what i said about learning the language. my advise is to keep your acount freeze until you be able to talk forex language.
  • #5
  • Oct 10, 2020 9:44am Oct 10, 2020 9:44am
Hi Khaled2259, Thank you for your valuable input, yes, deciphering charts are of paramount importance, I agree.

I guess, if I may, I could ask my question a bit differently then:- "Should I wait and quadruple my account balance before I double my lot size? "

I hope you know what I'm getting at...after all, forex trading provides you with all the tools to compound and exponentially increase your profits and losses

Thanks again!
  • #6
  • Oct 10, 2020 12:46pm Oct 10, 2020 12:46pm
my opinion is that trading is not a dash run but a marathon jog.
consider looking at the matter in percentage gain daily instead of doubling the unit size.
1% vs 10% gain daily. which is more doable and can be done more consistently and which will one day likely to blow your account.

say for example one's trading experience can be consistent enough to win 15 pips (or 10 or 30 pips or whatever) for 1% daily.
then one can calculate the unit size from there. when the equity size increases, the increase in unit size to trade will automatically follow keeping to the 15 pips for each trade.

so one factor is consistency, the other factor is time.
many would want to quadruple their accounts in a short time but alas in our hearts we hope that this can be done but only with a small account size and cannot be consistent enough.

for example if one can do 1% gain daily starting with $10,000, it can turn to $2mil in two years' time, plus or minus.
haha, but then how many can wait for two years right? we want it in a fortnight.
ITB - Seeing Orderliness amongst 'Randomness'
  • #7
  • Oct 10, 2020 1:57pm Oct 10, 2020 1:57pm
great input from Inthebox, totaly agree with him.
consistent small percentage, means big account by time.
  • #8
  • Oct 10, 2020 2:39pm Oct 10, 2020 2:39pm
Thanks so much Inthebox and Khaled2259, I appreciate your input and advice, totally!

However my original question remains - which is, once again, whether doubling my position size (while keeping leverage the same) will effectively quadruple (instead of doubling) my risk, and therefore because of this sheer miscalculation I would get blown out since the math is wrong ?

I guess you can make out by now that I'm weak in math and MM ( but that doesn't necessarily mean that I am weak in trading the charts properly and consistently )

So, once again if, say I have 10,000 in my a/c and I use, say 1 lot to trade and make the balance 20,000, and now I want to make the balance 40,000 in half the time ( obviously? ) then
should I use 2 lots from now on or should I wait till I make the balance to 40,000 first, using 1 lot and then switch to 2 lots per trade?

I hope you understand me...Thanks very much for your valuable time.
  • #9
  • Edited 3:55pm Oct 10, 2020 3:38pm | Edited 3:55pm
Quoting dmfx
So, once again if, say I have 10,000 in my a/c and I use, say 1 lot to trade and make the balance 20,000, and now I want to make the balance 40,000 in half the time ( obviously? ) then should I use 2 lots from now on or should I wait till I make the balance to 40,000 first, using 1 lot and then switch to 2 lots per trade? I hope you understand me...Thanks very much for your valuable time.
as mentioned in my previous reply, the consistency you look for is in making 15 pips.

so in your example, the consistency is in making 1,000 pips as follows:
1) $10,000 to $20,000 = profit of $10,000
1,000 pips = $10 each lot x 1,000 pips = $10,000 profit
2) $20,000 to $40,000 = profit of $20,000
1,000 pips = $20 for 2 lots x 1,000 pips = $20,000 profit
3) $40,000 to $80,000 = profit of $40,000
1,000 pips = $40 for 4 lots x 1,000 pips = $40,000 profit

so the 1,000 pips each time never change.
the time taken to double the amount each time still the same, never change.
assuming time is constant to make the 100% profit each time.
if it is one month to make 100%, then each time is one month.
it is not half the time to double the amount.
your risk remains the same constant each time.
what changes are the balance and lot size. they double at the same time.

hope this can answer what you asked.
ITB - Seeing Orderliness amongst 'Randomness'
  • #10
  • Oct 10, 2020 3:58pm Oct 10, 2020 3:58pm
Thanks, I think I understand, I appreciate your answer...
  • #11
  • Feb 5, 2022 2:59pm Feb 5, 2022 2:59pm
Hi again,
I am racking my brains over the same question, again, because I still think I haven't quite got it yet.

Some facts on my standard trading account:
Starting a/c balance: $100
Lot size: 0.10
Leverage: 500
Current balance: $200 ( two weeks from starting )
Maximum profit that was possible before reaching TP or manually closing: $20
Hedging: Yes when needed, using the same Lot size. I tend to start hedging at -10 dollars.
Scalping: Yes, always.
Swinging: Rarely.

It is important to know that I was quite comfortable with the above settings for Lot size even though it's more than the industry standard of 2% risk etc etc...

But now that I have doubled the a/c, I want to compound my profits and I don't want to keep trading at this 0.10 lot size forever !

Mathematically speaking therefore, how should I proportionately increase the current Lot size? meaning by how much? i.e should I logically now go for a 0.20 Lot size?

I guess my question is: a ratio of 0.10 lot size is to 200 a/c balance as ?what lot size? is to 400 a/c balance (and I'm guessing in 2 weeks time ).

I ask because doubling the lot size didn't work out too well in the past. Plus I read somewhere that doubling the lot size quadruples the risk !!
If so, then I think this contradicts 'inthebox's answer above.
Logically speaking then, I should double the lot size to 0.20 only when my a/c balance is 4 times my starting amount or $400, right?
Or wrong?

Please enlighten me as I am back to where I started with my confusion..and as you might have deduced, I am no good in math.
Thanks so much!
  • #12
  • Feb 6, 2022 8:11am Feb 6, 2022 8:11am

Hello
with your posts I have the feeling that you want to become a millionaire within 14 days with 100 bets ;and apparently without sufficient experience use a lever of 500 ;and why after the price has already run very well double the position instead of collecting the profit ? after a good run always follows a more or less strong correction !
I am only a small hobby trader but after a certain profit rate I reduce my position instead of increasing it and use a sl for the rest ;if it continues to run it is good for me and if not, I make no more loss ;anyway with your system it goes from top to bottom with double position at least twice as fast ;think about it ;
best regards Teatime
don´t follow me,you will loose your moneyy
  • #13
  • Feb 6, 2022 12:19pm Feb 6, 2022 12:19pm
Quoting dmfx
Hi again, I am racking my brains over the same question, again, because I still think I haven't quite got it yet. Some facts on my standard trading account: Starting a/c balance: $100 Lot size: 0.10 Leverage: 500 Current balance: $200 ( two weeks from starting ) Maximum profit that was possible before reaching TP or manually closing: $20 Hedging: Yes when needed, using the same Lot size. I tend to start hedging at -10 dollars. Scalping: Yes, always. Swinging: Rarely. It is important to know that I was quite comfortable with the above settings for...

I personally tried all of them (and some weird combos no one talks about it too); Long story short use a fixed % size instead of lots, doubling size vs account, etc etc those approaches are not the most "best" long term, you dont get the best from your trades no matter what you do

With a fixed % risk your account will get bigger over time and the drawdown its going to be smaller.. always
  • #14
  • Feb 6, 2022 3:24pm Feb 6, 2022 3:24pm
Thanks Teatime and Havo, I appreciate you taking the time to respond to my question.

I like the idea and notion of using a fixed % risk and that it's not better to go for doubling my a/c but rather I should use a fixed % risk based on my current a/c balance. Great!

I'd like to ask then how to calculate this without considering stop-loss. All the position size calculators I see on the web ask for stop-loss.

Because for me, stop-loss is variable i.e sometimes it's 20 pips and sometimes it's 50 pips, never the same.
I use my stop losses as somewhere below previous low on an up swing/trend and somewhere above previous high on a down swing/trend. The 'somewhere' is based on horizontal
support and and resistance levels intra-day and on what I 'feel' is the correct stop-loss.

I guess this raises a very important question ( one which I haven't thought of as yet ) - Does that mean I need to change my lot size as well for every trade ?!? (as %risk always changes)

I tend to use a fixed lot size per trade until the balance grows to a certain amount.

Thanks guys.
  • #15
  • Feb 6, 2022 6:06pm Feb 6, 2022 6:06pm
Quoting dmfx
Thanks Teatime and Havo, I appreciate you taking the time to respond to my question. I like the idea and notion of using a fixed % risk and that it's not better to go for doubling my a/c but rather I should use a fixed % risk based on my current a/c balance. Great! I'd like to ask then how to calculate this without considering stop-loss. All the position size calculators I see on the web ask for stop-loss. Because for me, stop-loss is variable i.e sometimes it's 20 pips and sometimes it's 50 pips, never the same. I use my stop losses as somewhere...
you can find a script that can do that for you, there is a good one on this forum where it shows you horizontal lines you can drag up or down (SL/TP), you tell it how much you want to risk and it adjust the lot size automatically.. easy peasy

Oh, i think its called "easy order" if i remember right

Even better (if you like to trade horizontal lines) its to use limit orders around that area, the profit return its MASSIVE if they get triggered.. dont forget to delete them after the move is done

And 1 last thing: dont aim for a "fixed" TP ratio because you never know for sure how much the market its going to move in your favor.. dont gave back unrealized profits, thats a noob move; cash in and enjoy a bigger capital and % for the next trade =)
  • #16
  • Feb 17, 2022 4:26am Feb 17, 2022 4:26am
Quoting dmfx
Hi All, I'd like to know if doubling the lot size doubles the risk (including profit and loss) OR whether it increases it by 4 ! I read somewhere that if you increase your currently traded lot size then the risk doesn't get doubled but instead it quadruples. Is that true? Whenever I double my lot size (after a long and successful run with a specific lot size), hoping to follow my now successfully established strategy to double my profits, I get blown out in half the time! So, for e.g. If I'm currently trading at a high enough lot size ( for me,...
I guess, increasing the trading balance into 2X is the best option! And the risk ratio is double, it’s not 4X, so when you are opening a trade with double trading lot size then your risk reward percentage is double here! By the way, according to my own experience, double trading lot size is very risky here; most of the time I lost my money when I increased my trading lot! So, be careful!
  • #17
  • Feb 17, 2022 3:27pm Feb 17, 2022 3:27pm
Thanks Max for your reply. And yes it's my experience as well that as soon as I increase my lot size ( actually when I double it ), then I mostly lose almost everything fast.
For e.g after I double my balance while trading on a set lot size, I then double the lot size thereafter ( because, well, when else, right?) and everything goes downhill real fast
  • #18
  • Feb 18, 2022 3:08pm Feb 18, 2022 3:08pm
Quoting dmfx
Thanks Max for your reply. And yes it's my experience as well that as soon as I increase my lot size ( actually when I double it ), then I mostly lose almost everything fast. For e.g after I double my balance while trading on a set lot size, I then double the lot size thereafter ( because, well, when else, right?) and everything goes downhill real fast
well, you have not found, yet, the correct answer of how to double the lot CORRECTLY?

p.s. just joking...
Maadik Hugiis. IQ 69.
  • #19
  • Last Post: Feb 18, 2022 3:20pm Feb 18, 2022 3:20pm
Quoting havo
{quote} you can find a script that can do that for you, there is a good one on this forum where it shows you horizontal lines you can drag up or down (SL/TP), you tell it how much you want to risk and it adjust the lot size automatically.. easy peasy Oh, i think its called "easy order" if i remember right Even better (if you like to trade horizontal lines) its to use limit orders around that area, the profit return its MASSIVE if they get triggered.. dont forget to delete them after the move is done And 1 last thing: dont aim for a "fixed" TP ratio...

i've even tried .01 lots per 100 account balance. so every 100.00 it increases .01. easy to know what your lot size is according to your balance.

does it work? yeah maybe. but i think a fixed % is probably better
0 traders viewing now