In FX you can use high leverage in a ‘controlled’ manner.
More: http://www.babypips.com/school/lots-leverage-and-profit-and-loss.html
With a USD 20,000 account you would sensibly risk 1% of the account in any one trade.
2% is ok for some people but let’s be cautious and assume just 1% risk.
Good risk management is often the difference between a successful & unsuccessful trader. Analysis is just part of the game.
1% of $20K = $200 (risk)
You would trade 1 full lot, which means that 1 pip = $10
So your risk of $200 = 20 pips
Enter a trade with a stop loss 20 pips below/above your entry so the maximum you can lose on that trade is 20 pips ($200).
As an example, let’s say you are targeting 50 pips.
If your target is hit you make $500.
If your stop loss is hit you lose $200.
The financial values all depend on the size of a trader’s account but the above is a good example.
The number of trades a trader makes in one day is also down to their individual trading style.
You might find this site can answer a lot of your questions: http://www.babypips.com/school/
It’s very good for anyone looking at FX for the first time.
Click on the preschool link for more on most of the questions you’ve raised.
