master forex trading with micro lots

Use Micro Lots To MASTER The FOREX Trading Process

Micro lots usually is the smallest position size that you can trade with. As new traders often do not have much in the way of starting capital, trading micro lots is a good way to keep the overall exposure of their trading account small.

In forex, micro lots equals 1/100th of a lot or 1,000 units of the base currency.

How Can Micro Lots Help Improve Your Trading?

Micro lots can help traders to really focus on the process of trading. Specifically focusing on entries, exits, money management, position sizing and trade management.

Even though it is the smallest amount tradeable, the trader still has some money in the market. This gives the trader a way to monitor their performance more accurately, because they are actually taking live trades.

Monitor your trade expectancy. Rather than jump into the market right away and blow up your trading account, perhaps it’s a good idea to take 5 or 10 trades at a time and monitor your trading results.

How big is your average winning trade? How big is your average losing trade?

Here’s the formula for expectancy:Expectancy = (Probability of Win * Average Win) – (Probability of Loss * Average Loss)

In “Trade Your Way to Financial Freedom” Dr. Tharp defines the following four components of expectancy (In the same section of the book Dr. Tharp also discusses how the size of you investing capital and your position-sizing model must be considered along with expectancy. I highly recommend reading Tharp’s book for a thorough understanding of these concepts.):

  1. Reliability, or what percentage of time you make money
  2. The relative size of your profits compared with your losses.
  3. Your cost of making a trade. (commission & slippage or spreads)
  4. How often you get the opportunity to trade.

micro lots trading mastery

“The goal of a successful trader is to make the best trades. Money is secondary.” Alexander Elder

Having a system that gives you a positive expectancy should be in the forefront of your mind when putting together a trading plan.

Trading micro lots gives traders real feedback on real trades. If you read a book or take a course and just jump into the markets and start trading. chances are you don’t really know whether you have an edge or how well you can execute your trading plan.

I hope you enjoyed this post! Did This Help You? If so, I would greatly appreciate it if you commented below and shared on Facebook

Here’s to YOU and I becoming BETTER traders!

Stacey Burke’s Trading Blog

Email: support@staceyburketrading.com

PS: If you’re struggling with being consistent in your trading and you don’t have a step-by-step BLUEPRINT for your trading success… Check out my 7 Step Daily Routine For High Performance Traders CLICK HERE FOR INSTANT ACCESS

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