What type of lot is traded in your live trading account?
This is the #1, absolutely most important thing you must know to prevent your deposit from being blown away accidentally!
It doesn't matter what TYPE of account you have... it can be called Standard, Mini, Micro, or anything else... What DOES matter is the lot size that is traded in it. Lot sizes are defined as follows:
Standard lot = 100,000 units
Mini lot = 10,000 units
Micro lot - 1,000 units
Brokers are not required to associate a Mini account with a default Mini lot size, or a Micro account with a Micro lot size. They may or may not, so you need to either ask them or search that information out in their Help Center or Terms of Use. Ask if the lot size for your account is a Standard lot. If you already have some trades in an account you can also figure out what type of account it is by using the formula in the #2 article in this series.
Don't assume that if it is one way in a demo account that it will be the same in a live account with the same broker. You may be able to trade mini lots in a demo but when you move to a live account the lot size will be standard.
The following is an example of something that happens all too frequently and shows what can happen if you don't understand this or confuse the account type with the lot size.
You signed up for a mini account. You place an order for 1 lot assuming that since it is a Mini account, the lot size is a Mini lot. Depending on your currency pair and your stop loss you have traded, for 1 mini lot your risk may be $50 (2.5% of a $2000 account). However, if you have actually, unknowingly, placed an order for 1 standard lot, your risk will be 10 times greater, $500, or 25% of a $2000. One trade can place your entire account at risk, and certainly a few trades like this that move against you will wipe out your account. This situation is made worse if you are in a high leverage account.
Again, before you open a live account, or if you've just opened an account, BE SURE you find out what size lot the broker uses when you place a trade in that account. Some brokers are up front about this and are very clear about it; others are not so clear. It is your responsibility to do your "due diligence" and find out. Only then can you start to plan a trade knowing what your risk is. Read the #2 article in this series to learn about Lot Size and Risk and how to figure each.
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