Multi-lot Strategies Revisited
by Trader Rich
I've visited the subject of trading in multiple lots several times in the past year or so and unfortunately have not had the luxury of trading more than 1 lot at any given time.
One reason I'm bringing this up is because of a trade that closed out at breakeven today. I had a short 1 lot USD/CAD position that was up over 60 pips early this morning. My target was still a ways off so with the thought of remaining discipline, I left it alone. When I checked on the market a couple of hours later, the position had closed at breakeven, no profit, no loss. This can be quite frustrating and 60 pips is significant enough to be a nice win for me. In the past, I may have jumped at the close position button abandoning my target expectations but doing this had turned into a pretty bad habit so I've tried to hold my profitable positions.
In reading different articles and forum posts, I've heard many traders state that it is impossible to make money by trading 1 lot positions. This may very well be true but what do you do if you have a cap on the percentage of risk per trade and don't have the capital to increase the amount of lots you trade?
- If you a trading a standard 100,000 unit account where a pip usually equals $10.00, switch to a mini-account where you trade in 10,000 unit increments where a pip usually equals $1.00. If I were to switch to a mini-account, I could trade 10 positions instead of only 1. 10 positions would give plenty of opportunity to utilize multi-lot strategies.
- Use Oanda as a broker where they support trades of any size. In this scenario, you can trade the specific amount you want and don't have to deal with rounded lot sizes. So if you have $10,000 and only want to risk 2% of your account on any trade, you would open a $200 position. If this position becomes profitable to $300, you can close out $100 of this position as profit. You can read more here: http://fxtrade.oanda.com/about/innovation/
- Increase your capital. If you increase your capital, you can afford to trade in multiple lots without compromising your risk.
I am seriously considering option #2 because I've only heard good things about Oanda from other traders.