Trading with Lots

[DaveB]

Hi,

This is a very newbie question and I hope someone will take the time to point me in the right direction. When trading, I have always used Spreadtrading on the Forex but now I would like to use Lots to trade. The problem is, I have no experience trading with lots, and wondered if any of you traders would direct me to a learning center or educational site that would give a description on how to trading with Lots.

Thanks in advance for your help.
Dave

[Aleph]

Lots? Spreadtrading

1 lot usually reffers to 100'000 of the base currency, but this also depends on your broker. But finally I don't understand your question right... Are you simply asking what to do with a lot?

Well, sell or buy it

Aleph

[DaveB]

Hi Aleph, Spreadtrading is different to trading with Lots. To be more specific, it is the process of trading with lots I am interested in. ie I have heard traders placing 'multiple lots on a trade' and then 'taking part of a lot and leaving the rest on the trade'. I need to know how you go about doin that as I have never traded that way. I think the advantage when trading with lots is that you can enter several positions at once wheras with Spreadtrading you only enter one position. Please correct me if I am wrong.

[PLATNM456]

Originally Posted by DaveB

Hi,

This is a very newbie question and I hope someone will take the time to point me in the right direction. When trading, I have always used Spreadtrading on the Forex but now I would like to use Lots to trade. The problem is, I have no experience trading with lots, and wondered if any of you traders would direct me to a learning center or educational site that would give a description on how to trading with Lots.

Thanks in advance for your help.
Dave

Whats up Dave,

Gotta love this Business. I wish there were all of these ways available when I started out other than trial and error but I know that the edjucation center on the FX Street website(and this is NOT advertising for them) is where I have sent a great many of my brokers and agents who work for me. Keep it simple to get things started.

[DaveB]

Thx PLATNM456, I'll take a look.

[stockwet]

Originally Posted by DaveB

Thx PLATNM456, I'll take a look.

DaveB,

Think of a lot as a unit of measurement, similar to stock shares. If I'm trading stocks, I might buy 10 shares. If the price rises to a certain point, I might sell 5 shares and see how far my remaining position goes.

Trading with lots is no different. A lot represent 100,000 units of the base currency. If USD were your base currency, you would actually be trading with $100,000 on a 1 lot trade. However, with Forex, you're highly leveraged, so you're controlling that $100,000 with only a fraction of your money (that's where margin and leverage come into the discussion.)

A common practice is to trade with multiple lots and take out a portion of your position (1 or more lots) as you become more profitable. So, similar to the stock example, I might buy 10 lots of EURUSD. When a price target is hit, I could exit some of those lots leaving others in play for more profit (or potential loss.)

Here's one site that has some good introductory information. I don't know your level of expertise. So, sorry if I'm below your knowledge level.

http://www..com/

Regards,

stockwet

[stockwet]

Moneytec is so IRRITATING.

www. b a b y p i p s . c o m

[DaveB]

Hi Stockwet, to give you some idea I've been Spreadtrading for about 18 months but never ventured into trading with lots, but it does seem to have its advatages over Spreadtrading except for the tax you pay on lots.

The brief description you gave is very helpful and I have a much clearer perspective now on how to trade with lots. Am I wright in thinking that you can trade multiple lots set at different levels of price action eg first lot at 15pips, second lot at 25 pips, third lot at 35 pips etc. Then as you say, take one lot out at a profit and leave the others in just in case price goes that far.