Protective Stop-Loss
Substantial gains made from interest rate differentials offer indisputable evidence that the carry trade egy has been very successful over the last couple of decades. Still, this egy entails significant risks and an adequate protective stop is required. We are using a protective stop-loss equivalent to five times the average true range.
Position Sizing
Our standing dimension varies according to each currency volatility. Generally, the more volatile the currency is, the fewer lots we all exchange. By way of instance, let us assume you have $10,000 and you're trading 10K lots, you decide to restrict your risk per trade to 3% or $300 and the 90 days average true range for the EURUSD is 100 pips. In cases like this, if you go long EUR/USD you could buy 3 lots, because ($10000 * 3 percent ) divided by (0.0100*10K) = 3 lots. In case the final result is not an integer you should always rounded it down to limit your vulnerability