<p>Marginal revenue product (MRP) is a key concept in economics that measures the additional revenue a business gains from employing one more unit of a variable resource. In the context of trading, understanding MRP can help traders make informed decisions about risk and reward. Let's delve into how it works, why it matters for traders, and provide an example using MetaTrader 5.</p>

<h2>How It Works</h2>

<p>The marginal revenue product is calculated as the change in total revenue (ΔTR) divided by the change in the quantity of the variable resource (ΔQ). Mathematically, it's expressed as:</p>

<p><strong>MRP = ΔTR / ΔQ</strong></p>

<p>To illustrate, consider a trader using MetaTrader 5 who increases their position size (variable resource) from 1 to 2 lots. If this increase results in an additional profit of $100, the MRP would be:</p>

<p><strong>MRP = $100 / (2 lots - 1 lot) = $100 per lot</strong></p>

<h2>Why It Matters for Traders</h2>

<p>Understanding MRP is crucial for traders as it helps in:</p>

<ul>
  <li><strong>Risk assessment</strong>: MRP indicates the potential revenue from an additional unit of risk. A high MRP suggests a favorable risk-reward ratio.</li>
  <li><strong>Position sizing</strong>: By knowing the MRP, traders can determine the optimal position size that maximizes their profit for a given level of risk.</li>
  <li><strong>Diversification</strong>: MRP can guide traders in allocating capital across different instruments, ensuring they invest more in those with higher MRPs.</li>
</ul>

<h2>Example</h2>

<p>Let's consider two instruments, EUR/USD and GBP/USD, both with a leverage of 1:300 on STB Provider's platform. A trader wants to allocate $10,000 across these two instruments.</p>

<p>After analyzing the market, the trader expects the following returns and risks:</p>

<table>
  <tr>
    <th>Instrument</th>
    <th>Expected Return (per lot)</th>
    <th>Risk (per lot)</th>
  </tr>
  <tr>
    <td>EUR/USD</td>
    <td>$50</td>
    <td>$20</td>
  </tr>
  <tr>
    <td>GBP/USD</td>
    <td>$60</td>
    <td>$30</td>
  </tr>
</table>

<p>The trader calculates the MRP for each instrument:</p>

<ul>
  <li><strong>EUR/USD MRP = $50 / $20 = 2.5</strong></li>
  <li><strong>GBP/USD MRP = $60 / $30 = 2</strong></li>
</ul>

<p>Based on the higher MRP, the trader decides to allocate more capital to EUR/USD, resulting in a more efficient use of risk and potentially higher profits.</p>

<h2>Key Takeaways</h2>

<ul>
  <li>Marginal revenue product (MRP) measures the additional revenue gained from employing one more unit of a variable resource.</li>
  <li>MRP helps traders assess risk, size positions, and diversify their portfolios.</li>
  <li>By calculating MRP, traders can make informed decisions about allocating capital across different instruments.</li>
</ul>