Of course in FX trading every broker drums into you how using leverage of 50 - 200 times is a key selling point of trading FX. Yet it is actually the key reason why the vast majority of traders lose money. However, if you've read reputable educational sites on FX trading, the key takeaway is actually to trade no more than 5% of your account value at all times. This equates to a maximum of 20x leverage at most.
In FX terminology,
1 Standard Lot = 100,000 in nominal value of the currency pair where 1 pip usually equates to about $10 of the currency equivalent.
1 Mini Lot - 10,000 in nominal value of the currency pair where 1 pip usually equates to about $1 of the currency equivalent.
1 Micro Lot - 1,000 in nominal value of the currency pair where 1 pip usually equates to about $0.10 of the currency equivalent.
It is very important to know this because some brokers impose minimum trade sizes in order to coax traders to trader in larger volumes.
With that said, since the turn of the year, I have switched from trading in Standard lots to Mini and even Micro lots at times. This is the primary reason that firstly, I am hardly losing any money in FX trading in 2015 (touch wood!), and more importantly, I can concentrate on appreciating other things around me like my family and my hobbies without feeling the strain and stress of having to constantly check FX prices.
It is well known that the biggest indicator that stress and strain has gotten the better of you when trading FX, is the frequency in which you feel the urge to check FX prices. And these days I hardly check them any more than once in the morning, once in the afternoon and once at night. Truly a far easier task by far.
So I urge all traders to review their trade sizes and not fall into the leverage trap that I've emerged from.
Trade safe.
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