Confusion Re Lots

Beginner Questions
1

I’m really stuggling to work out how many lots I need to use for my trades.

I’m demo accounting and puting stop losses on when entering trades or pending orders. My stop loss is put in by position rather than a certain amount of pips.

Now if I had a micro account and a balance of £300 and say I wanted to take a trade using 3% of this with a stop loss of 71 pips, how many micro lots would I need to use and how do I work this out for future reference?

Thanks in advance for the help!

Rob

2

Hello, Rob

Click this link, and try the formula given there — 301 Moved Permanently

3

Is your trading account in pounds? or USD? The following presumes its in £.

Anyway from most micro lots (USD denominated pairs) its 10 cents a pip or at today’s exchange rate 6.24 pence a pip (£0.0624).

3% of £300.00 = £9.00 risk

So easy formula:

risk /SL pips / pip value = # of lots

£9.00 / 71pips / £0.0624 = 2.03 lots

You will always have to factor in the exchange rate for your accurate pip value

Cheers

4

Thank you both for excellent replies! It seems much much clearer now.

Can I just ask where can I find or how would I work out the up to date exchange rate? I’m guessing just a simple exchange website?

Best Regards,

Rob

5

Hi, Rob

Your trading platform should give you pip-values in pounds, for your £-denominated account.

Regarding the formula I referred to, I assumed that you would adjust the formula to correspond to your £-denominated account.
I probably should have re-written the formula for you. Here it is, for an account denominated in pounds:

[B]Number of Lots = [(Account Balance, in £) x (Risk %)] / [(Stop Loss, in pips) x (Pip Value, in £)][/B]

Note that if your trading platform gives you pip-values as:

[ul]
[li]pounds/pip/mini-lot, then the formula will give you position size in mini-lots
[/li]

[li]pounds/pip/micro-lot, then the formula will give you position size in micro-lots
[/li]

[li]pounds/pip/nano-lot, then the formula will give you position size in nano-lots
[/li][/ul]

6

I think your formula is missing a couple of sets of brackets…

7

You are right. Thanks for catching that. I have made the correction.

8

That’s a great forumla thanks!