Calculating Position Size

It is an important part of your risk management to trade a position size that will allow you to stay in the game: if you trade a position size that is too large, a string of losses may deplete your capital entirely and you will have to re-fund your account. You need to trade a position size that is proportionate to the trading capital you have available and that will allow you to suffer a few losses and still stay in the game.

STAR:fx Daily Signals could issue a trading signal in each of the 6 currency pairs we follow such that you have 6 positions open at the same time. This has not happened to date but it could happen. Therefore in order execute each trade, you need to have 6 x MM in your trading account where MM is the margin required for a single position. You also need some 'extra' funds just in case 1) a few of those positions go offside but not enough to trigger stops or 2)some of the positions do trigger stops and are loss making. So how much is all that?

For a standard mini account, the minimum lot size you can trade is 10,000 and the standard leverage is 200 so using the margin calculator above, the maximum you need is GBP 50.00 margin per trading position (see GBP/USD). As a rule of thumb, we suggest each trading position should be no more than 10% of your trading account value. Or, at minimum, you need to have in your trading account 10 times the amount for a single position. Therefore you need at least GBP 500 in your trading account and each position size will not require more than GBP 50 in margin.

Most decent brokers offer demo accounts for you to practice trading and get used to the business of position size vs margin required. For live trading, we suggest novice traders open a 'mini' account which can be opened with as little as GBP 300 and enable you to trade small lot sizes.