Fixed Lot Size vs Fixed Value

Hey guys, Ive been trading with a fixed percentage, risk 1 percent of my account, and i've been adjust the lot size accordingly. Its a bit annoying since u have to calculate the amount of pips yoru risking, and the currency pair to find out what 1% lot size is. Fixed lot size would be better since i dont have to calculate before a trade. now if your adjusting your pips on stoploss, some trade your risking more then others. Is there any advantages ? I've heard Fixed Lot size will create a smoother equity curve in your account?

thanks.

If you orientate yourself on the higher end then you should be fine by using a fixed lot-size. Let's say the max entry to stoploss distance is 50 pips. Then make that your benchmark for a 1% account risk. That way you make sure that your trades never get too risky.

solid advice from Custos

yeah thats what i was thinking, fixed lot size with the biggest SL i would use is 60 pips while remaining under 1 percent. As of right now I use something similar, but lets say i take a trade thats only requires 30 pips, I would double the lot size. I guess in the end either way works.

thanks.

Like its name, the fixed spread has a fixed cost regardless of the market's fluctuation. The spread cost remains the same whether the market is chaotic or stable.
Imo fixed spreads have several advantages, like being more stable in value and agreed upon from the start, and we don't have to worry about sudden price hikes. It also helps us manage our money consistently.
But….remember that there is a possibility of requotes. This is a situation when the broker cannot process our order because the market price has suddenly changed, and the broker cannot adjust the spread according to the market movement. For example, If we buy EUR/USD at a price of 1.2100, but the market price has already changed to 1.2105 before the order can be processed. Then, the broker will block the request and ask you to buy at the new price.

Fixed Lot Size: With a fixed lot size, the trader specifies the exact amount of currency they wish to trade. For example, a trader might choose to open a position with one lot, which represents a standard size of 100,000 units of the base currency. With this approach, the trader's risk per trade is consistent, regardless of the price of the currency pair.
Fixed Value: With a fixed value approach, the trader specifies the exact amount of currency they wish to risk on each trade. For example, a trader might choose to risk $100 on each trade. The lot size used to achieve this risk amount will vary depending on the current price of the currency pair.

@Uncharted, My opinion doubling the lot size for trades that require less pips is not a good idea. You should keep the lot size consistent to maintain a consistent risk per trade.
@Kaldir, good explanation of the difference between fixed lot size and fixed value. It's important for traders to understand the pros and cons of each approach and choose the one that works best for their trading style.

Fixed Lot Size:

Pros:
Consistent risk per trade, which can help a trader to manage their overall risk effectively.
Easier to calculate potential profits and losses for a given trade.

Cons:
The amount of currency traded may not always be appropriate for the size of the account, leading to under or overexposure.
The trader may miss out on potentially profitable opportunities if the size of the lot does not match the account size.

Fixed Value:

Pros:
The trader can specify the exact amount they are willing to risk on each trade, which can help to manage risk effectively.
The lot size used will adjust to match the size of the account, allowing the trader to take advantage of opportunities without risking too much.

Cons:
Potential for inconsistent risk per trade, which can make it harder to manage overall risk.
Calculating potential profits and losses can be more complex, as the lot size used will vary depending on the current price of the currency pair.

I see stop loss and lot size as being quite different aspects of risk management. To me a stop loss sets a level when the trade is lost and likely not to be recoverable. It has the extra benefit of allowing to sleep at night. I use ATR or MA or, occasionally, fixed. I often use a trailing stop loss to reduce risk or lock in profits. Once I have set the stop loss I then calculate the lot size as a proportion of account balance with an eye on total risk of all open trades.

Can someone help me with this question?

If I have $1000 US in my account
And I have a max allowed leverage of 20:1
How much max leverage power would that be on US500? 10.00 lots? (Complete guess)
And if my account had $10000 US in it instead, would that then be 100.00 lots?

Again
If I had $1000 US in my account, and a max leverage of 1:500, how much lots would that be on US500?
Thank you very much.

With fixed percentage risk, you are limiting the amount you risk per trade to a percentage of your account balance. This means that as your account balance increases or decreases, the amount you risk per trade will adjust accordingly.