Hello all! I’m making sure I understand basic Forex concepts before I go on learning more complicated stuff :rolleyes:
My question is about position size in money management. I’ve read about it and leverage here in the forum but in practice I think I’m making something wrong because when I calculate the size in lots of my possible position I get such large numbers make me think I don’t understand it at all.
Example so you can hopefully point where I misunderstood:
Account total: 2500$
Risk taken per trade: 2% account total
Stop loss positioned 18 pips below current price.
Position size= risk/(pip valuepips at risk)
25000.02= 50/(0.1*18)
Position size= 28 minilots?! that would equal to a real leverage of 11.2:1
I know I’m slow at this but I just want to be sure how to properly calculate and understand size positions so I can apply proper money management to my demo trading.
If you did minis, the closest you would get would be 2 lots.
You could go to 3 lots, but that would put you at $54. Slightly over your 2%, but within range.
I would err on the lighter side, and use the difference to get a little more value out of my stop loss placement.
Which brings me to a question, what is your t/p target, and how did you arrive at your 18 pip stop loss?
The only thing you control in this game is your ability to put on a trade. Once you are committed, it’s up to the market.
Aaah yes I made a typo there so I meant micro lots, my bad.
Yesterday I was doing some manual backtesting of methods, being aware that it’s nearly useless as you are negating the feelings part of Forex that could easily be the most hard to have in control, or so it is as I read.
So it seems I was doing things correctly then? I’m going to use micro lots as default regardless of account as it’s the only way to use a proper money management with GFT dealbook, replicating partial mini or standard lots (1.67 lots= 167 micro lots)… it’s a good idea or am I missing something?
Master Tang it was just an example, I used a 18 pips stop loss to ilustrate it as I ask myself what I was doing wrong in a particular backtested trade.
As I was scrolling 1 month in some pairs and getting so good results and being a newbie I thought it was not possible and it was me making mistakes… as it’s weekend I could not try a real demo trade
In demo as I have a large account of 100k$ I was calculating several lots in each trade, anywhere from 2 to 10 and it seems I had in mind we should be using much less but what do I know anyway
