Imagine you have the following as a trader within a period of 30 days:
Lots = 150 Lots
Total Trades = 50 (both profits and losses)
How do we get average trade size? We get the total lots within the period (say 30 days) and divide by total number of trades taken (both profits and losses)
Therefore Average trade size = Total lots / total number of trades.
Therefore. Avg. Trade size = 3
Example 1 - How the Volume management applies?
1. Volume Management
(3 lots * 25%) = 0.75 lot
(3 lots * 200%) = 6 lot
Bottom of range - 0.75 (Lower Band) Top of range - 6 (Upper Band)
Thus, Let's say:
35 trades within the 0.75 to 6 lots range.
10 trades below 0.75 lots
5 trades above 6 lots
The profitable trades that fall outside the trade range will be removed.
In the funded phase of your trading account, the management of trades is typically based on the aggregate volume of your positions rather than individual trades. Therefore, if you execute 5 simultaneous trades of 2 lots each on GBPUSD, it will likely be considered as one trade in terms of volume management and risk management rules. This is because the total volume of your positions (10 lots) is what matters for calculating risk exposure and managing your account according to the rules set forth in the funded phase.
Example: Taking 5 simultaneous trades of 2 lots each on GBPUSD.
Trade 1: Buy 2 lots GBPUSD
Trade 2: Buy 2 lots GBPUSD
Trade 3: Buy 2 lots GBPUSD
Trade 4: Buy 2 lots GBPUSD
Trade 5: Buy 2 lots GBPUSD
In this scenario, you have executed 5 separate trades, but since they are all on the same currency pair (GBPUSD) and executed simultaneously, they will likely be treated as one aggregate position.
Total volume: 5 trades * 2 lots = 10 lots
Example 2
This is how the Volume Consistency (Average Lot size) is calculated:
(All trades combined Lot size) / (Number of closed trades) = Average Lot size
For instance, let's say you have combined XAU and US30 total Lot size = 20.00, and 100 closed trades then: 20.00 / 100 = 0.20 Lot average size.
To figure out your Upper and Lower Lot size bands, you need to either add 100% or subtract 75% from your already figured average lot size.
0.20 * 2 = 0.40 Lot Upper band
0.20 * 0.25 = 0.05 Lot Lower band
Your entire trading history is considered when forming your average trade size (Upper and Lower lot size bands)
Additional Information
The way the calculation works is the average is calculated first without grouping trades as single trades. Then the trades are grouped after the ranges have been calculated.