Confused about the POSITION SIZE CALCULATOR

Hi!

I am just beginning to look at FOREX after having traded stocks for more than 2 years. I am confused about the results of the Position Size Calculator here at Babypips:

When I enter GBPUSD and 1000USD account size with 50pips stop loss and 5% risk, the resulting position size is 0.1. I was expecting then that for every pip I lose, I will lose 1 USD because 5% of 1000USD is 500 USD and so I have 50 pips: 50 USD which is a 1:1 ration of pips to dollars.

BUT, when I try this on my IC Markets DEMO account, it seems that when I enter 0.1 Volume, this is too low-- in fact I can enter a 1 volume position and still just lose around that 1:1 pip:dollar ratio (losing 1 pip means losing 1 dollar). That is a 10x discrepancy.

Summary: Babypips Position Size Calculator says I should only buy 0.1 volume to get a 1:1 pip: dollar ratio, yet a demo account on IC markets shows I can enter 1.00 volume and get that 1:1 pip: dollar ratio on GBPUSD, 5% risk, 1000USD demo account with 50 pips stop loss.

Can someone check?

The Babypips Position Size Calculator is correct.

The correct position size for your trade is 0.1 standard lot (that is, 1 mini-lot).

The pip-value (which you can figure in your head in this case) is $1 per pip, because the quote currency of the pair you are trading matches your USD account currency, and you are trading one mini-lot. Check this, using the Pip-Value Calculator, if you are uncertain.

These metrics – stop-loss = 50 pips, and pip-value = $1 per pip – match your chosen risk percentage (5%) and risk amount ($50).



As for the different results shown on your trading platform, I can’t speak for your broker or their platform. But, I can promise you this: If you enter a one-standard-lot position (100,000 units of GBP/USD), you will be trading with $10 per pip, not $1 per pip, and your risk (with a 50-pip stop-loss) will be $500, not $50.

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Oh, so the Volume in IC markets is in mini-lots not in lots?

I have no idea.

As I said, I can’t speak for your broker or their platform.

I got it :slight_smile: I was confusing PIPS with POINTS. Now I know points are NOT pips, rather they are 1/10 of pips :slight_smile: Thanks!