How Much Should I Risk and Use in Margin When Trading CFDs at The Trading Pit?
At The Trading Pit, we want traders to be smart, disciplined, and responsible.
Risking a large part of your account on a single trade is not smart — it’s gambling.
Gambling may feel exciting, but it often leads to:
• Fast and painful losses
• Emotional and impulsive decisions
• Giving up before your strategy works
Successful trading is built on discipline, consistency, and proper risk management, not luck.
Recommended Risk Management Practices
To trade safely and sustainably, follow these limits for each trade idea:
• Margin use per trade idea: less than 30% of your starting account balance
• Risk per trade idea: no more than 1.5%–2% of your starting balance
What Is a Trade Idea?
A trade idea is a group of trades based on one market view.
For example, if you believe the US dollar will rise and open multiple USD-related trades, that counts as one trade idea.
How to Calculate Margin
You can find all the required information by right-clicking any instrument and selecting “Specifications.”
Formula:
Initial Margin Required = (Number of Lots) × (Initial Margin Rate) × (Contract Size) × (Current Market Price)
• Number of Lots → trade size
• Initial Margin Rate → margin percentage set by the broker
• Contract Size → nominal value of one lot
• Current Market Price → current price of the instrument
Example 1 – EUR/USD Trade
1 lot EUR/USD, margin rate 2% (0.02), contract size 100,000, market price 1.1000
1 × 0.02 × 100,000 × 1.1000 = 2,200
Margin required: $2,200
Account balance: $10,000
10,000 × 0.30 = 3,000
$2,200 = within limit, $4,400 (2 lots) = exceeds 30% limit.
Example 2 – Maximum Trade Size
Max Trade Size = (Account Balance × 0.30) × Leverage
Balance $10,000, leverage 1:100
(10,000 × 0.30) × 100 = 300,000
Maximum exposure: $300,000 (≈ 3 lots).
Why Small Risk = Long-Term Success
Even the best traders lose sometimes.
Too much risk can quickly destroy your account.
High risk = stress, emotion, and poor judgment
Low risk = control, calmness, and consistency
Trade Small to Stay Strong
Risking 1%–2% per trade idea helps you survive losing streaks and stay focused.
Trading is a marathon, not a sprint.
How Leverage and Margin Work
Leverage amplifies both gains and losses.
Using less than 30% of your balance as margin keeps you safe even in volatile markets.
How We Monitor Risky Behavior
Our risk team monitors all accounts.
• Soft breach: warning
• Continued risk: trading limits applied
• Hard breach: account closed
These measures protect traders and promote good habits.
Final Words: Trade Smart, Think Long-Term
Risk < 2%
Margin use < 30%
Focus on discipline, consistency, and sustainable growth.
Trading is not about getting rich quick — it’s about building good habits and long-term success.