Sorry, I'm a beginner. I want to ask, if I'm trading with $100 and leverage 1:500 on a cent account at FBS, what would be the safest lot size for me to use? And I'm using a martingale pattern ea. For example, if I sell at 1.08000 in the EURUSD pair and it keeps rising to 1.08800, but because of the loss, sometimes I keep opening positions with added lot size. I would like to ask for your advice, is it safe to use lot size of 1?
@ Yohan:
- I want to ask, I trade with a capital of $100 with leverage of 1:500 on a cent account at FBS, what is the safest lot size I should use?
In a cent account, the value of a 1 Cent lot contract is one-hundredth of a micro account, which is USD 10 or 0.0001 of a standard lot, or equivalent to 10 x USD ¢ 100 = USD ¢ 1000.
Read also: The Difference Between Cent and Micro Accounts
Assuming you are trading the XXX/USD pair (EUR/USD, GBP/USD, AUD/USD, NZD/USD)
Balance = USD 100 or equivalent to USD ¢ 10,000.
Leverage = 1:500 = 0.2% of the contract value.
For the EUR/USD pair, 1 ¢ lot has a value of USD ¢ 0.1 per pip.
In this case, you need to calculate capital endurance. To know the capital endurance, you must first calculate the required margin.
If you buy or sell 1 Cent lot EUR/USD at a price of 1.0900, then the margin required = (USD ¢ 1000) x 1 x 0.2% x 1.0900 = USD ¢ 2.18.
Your funds to withstand the position until a margin call is triggered are: (USD ¢ 1000 - USD ¢ 2.18) / USD ¢ 0.1 = 9978 pips. (Note: USD ¢ 0.1 is the value per pip for 1 Cent lot EUR/USD).
If you buy or sell 10 Cent lot EUR/USD at a price of 1.0900, then the margin required = (USD ¢ 1000) x 10 x 0.2% x 1.0900 = USD ¢ 21.8.
Your funds to withstand the position until a margin call is triggered are: (USD ¢ 1000 - USD ¢ 21.8) / USD ¢ 1 = 978 pips. (Note: USD ¢ 1 is the value per pip for 10 Cent lot EUR/USD).
So for sufficient endurance, if you trade normally, you can open a maximum position of 10 Cent lot.
If using an EA that works with the martingale technique, it is best to start with the smallest lot, in this case 1 Cent lot, because we don't know when the price movement will reverse while each time a stop loss is executed will automatically open a new position with a lot size that is 2 times larger.
You should know that in theory the martingale strategy will definitely profit, it's just that you won't know when the profit will be, depending on when the price will reverse as you expect.
For martingale you need a large enough fund because to open the next position is always 2 times larger than the previous one. The larger the capital, the longer it can last. If you lose at the beginning, then to be able to profit usually depends on when the trend or price movement will reverse as expected. If for a long time the price does not reverse as your position expects, then you will inevitably be subject to a margin call.