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It is critically important that you make use of Stops in all of your investments.
The Stop is a tool which serves to prevent you from losing all of your money, providing you with a chance to see another day in the world of investment.

The amount of money you risk in your investments is the other factor you need to take into consideration and it must be understood and mastered, if you are going to succeed in this market. The amount of risk depends on the value of the balance or equity in your account. The higher the balance or equity, the more opportunity the market will offer and more risk you will
be able to take. I say opportunity, because you do not risk everything in a single trade. In order to stretch the balance/equity in your account, you must abide buy rules of percentage. Risk no more than 4% of your balance/equity, and we highly recommend
between 3% and 2% in each trade.

Take into consideration that you have a Mini account with a balance/equity of $5,000. and 4% in amount of risk is $200. (4x5,000=200), for each trade that you execute; 3% would be $150.; and 2% would be $100.

Now, it is highly important how to use the percentage of risk (2,3 or 4%) in relation to the currency pairs you choose to trade, because different pairs have different Spreads and different PIP value. For example: the pairs where the USD is the Base
currency (located to the left) the value of the PIP varie between 80 to 90 cents of a Dollar; whereas the pairs having the USD as the Cross currency (located to the right), the value is fixed at a Dollar per PIP.
Having understood this difference in the price of the PIP, we can clearly see that the pairs where the USD is the Base, offer more for your money.
But, what is it that they offer?
Off course we know is money! But what I am looking for is what I mentioned earlier when I said: Opportunity. Let's take a look.

Using the same amount of of Balance $5,000., in a Mini account and choosing a pair where the USD is the Base currency and we use a risk factor of 4% of the Balance, it would be as follows:

USD/JPY = .90 per PIP
Risk (4%) = $200.00
4 Lots = $3.60

Once you have entered the trade you have to find where to place your Stop. You must find an adequate level to place your Stop in order to have more of an opportunity to win the trade.
In a market where fluctuations can be very high, placing your Stop as far away as possible from your entry it is very important. Lets take a look at the different ways we can place the Stop in the USD/JPY pair in relation to the amount of risk per trade.

4 Lots = $3.60 with a risk of $200
tells us that the Stop can not be
placed further than 55 PIP behind
your entry level. Because if the
fluctuations would hit the Stop, we
would be losing $198 (3.60x55=198).

Now, if we choose to buy 3 Lots, instead of 4, the opportunity increases to favors us.

3 Lots = $2.70 with a rsik of $200
it indicates that the Stop could be
placed 73 PIP from our entry level.
Increasing our opportunity level by

18 PIP and the cost of risk would be
lower, because if the fluctuations hit
the Stop we would lose $197
(2.70 x 73= 197)

But, if we were to mimize the amount of Lots purchased, we will see a great deal of increase in our opportunity value from our original trade. Take a look.

2 Lots = $1.80 with a risk of $200
it indicates that the Stop could be placed 110 PIP from our entry level.
Increasing our value of opportunityby 37 PIP from the previous sampleand duplicating it from our originalexample trade.

If you compare these results of the USD/JPY, against pairs such as the EUR/USD or GBP/USD where the USD is the Cross currency, you will be able to see that the pairs where the USD is the Base currency, offer us more opportunity. These formulas of placing the Stop apply equally to all pairs.

In relation to these results you have a choice in the risk factor and the amount of Lots to purchase. We normally do multiple Lots, the odvious reason is to earn more in our trades, but the reason and in relation to our norms is as follow:

Lets say that our trade of 2 Lots in the USD/JPY has started to move in our favor and we are up 50 PIP, at this time we could
do two things; 1- close both Lot to guarantee ourselves a win; or 2- close one Lot to take a win and move the Stop to our entry
level to guarantee not taking a loss and provinding ourselves a chance to win more money with zero risk of a loss with the
remainning Lot.

Once you have let the remainning Lot run you must move your Stop according to the positive moves the pair takes in order to
protect your earnings. As a rule, you should move the Stop 50% of the positive move the pair makes. If the pair moves 30 PIP
then, you should move your Stop 15 PIP in the direction of the pair.

HOW MANY POSITIONS OPEN AT THE SAME TIME

If weconsider the $5,000 account in relation to this, we can calculate how many positions we can have open, it would be 25 (25x200=5,000), however, in order to guarantee your transactions no Broker would allow this and they will maintain a limit on the amount you can risk base on the percentage of your balance or equity, whichever is smaller. This is known as
Leverage, in some Brokers this Leverage can be change, if your Broker allows you to do this, consider 200:1 or higher this way you can further avoid the Broker to execute what is known as a Margin Call, which means that if your equity goes down beyond a certain level, the Broker will close all your trades without any previous notice and you will lose all the trades you have open.
In order to protect yourself from a Margin Call we suggest you keep a maximum of only 25% of your total Equity at risk at one time. This would be $1,000 in total open positions.

Keep this always in mind: in the world of investments,
Forex or others, we look for OPPORTUNITY to win.
If you keep the rules posted here, you will be a winer!