Correlation with margin and lot size?

[lalatony]

Thanks phil838

[Amwel]

i just want some clarification,

i have a micro acc in GBP, so if i was to risk 3% of £250 capital.
giving me £7.50

would i have to convert this in to a dollar ammount before entering the dollar amount into formulas to calculate position size?

i would be greatful if i could get some adivce on this matter.

thanks in advance.

[rhodytrader]

i have a micro acc in GBP, so if i was to risk 3% of £250 capital. giving me £7.50

would i have to convert this in to a dollar ammount before entering the dollar amount into formulas to calculate position size?

If you’re trading a GBP base pair (GBP/XXX), then no. If you’re trading with another base currency then you’d have to convert to that.

[Amwel]

thanks rhodytrader.

[gap66]

  I am using a demo with FXDD they have 0.01 to 0.05 lots, them jump to 0.1
   
  0.01 is a mini lot I think. Today a made 92 pips with 0.01 = $15.01 that is about 16 cent a pip?. :confused:

FYI, I use FXDD as well. The order window goes from .01 to .05 lots then jumps to 1 standard lot. However, you can type in any number you want in the volume window. Those numbers are just presets.
Also, .01 is a microlot, .1 is a minilot and 1.0 is a standard lot.

[Amwel]

hey all

a quick question…does anyone know how to manually calculate the pip value of the spot gold and spot silver pairs?

thanks in advance

[rhodytrader]

If a pip is $0.01, then the pip value is Size x $0.01.

[forex_wales]

Here’s a simple equation for figuring how many lots to trade. This equation works for any size account, any risk %, any currency pair, any size stop loss, and it works for standard lots, mini-lots, and micro-lots.

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

First, let’s define some of the terms. [B]Number of Lots[/B], [B]Account[/B] [B]Balance[/B], and [B]Stop Loss[/B] are self-explanatory. [B]Risk %[/B] (expressed as a decimal) refers to the percentage of your entire account that you are willing to risk on this trade.

[B]Pip Values[/B] depend on lot size, and on the currency pair traded. For all currency pairs having the USD as the cross-currency
(i.e., pairs of the form XXX/USD), pip values are $10/pip for standard lots, $1/pip for mini-lots, and $0.10/pip for micro-lots;
for other pairs, pip values vary as prices vary, and these can be found in your trading platform.

Here are some examples, using the equation above:

(1) You have a mini-account, with a balance of $7,200. You want to risk no more than 2.5% of your account balance on a EUR/USD trade, with a 45-pip stop loss. How many mini-lots can you trade?

Number of Lots = ($7,200) x (0.025) / (45) x ($1) = 4 mini-lots

(2) You have a standard account, with a balance of $23,785. You want to risk no more than 3% of your account balance on a EUR/GBP trade, with a 56-pip stop loss. How many standard lots can you trade?

Number of Lots = ($23,785) x (0.03) / (56) x ($15.97) = 0.8 standard lots = 8 mini-lots

(3) You have a micro account, with a balance of $715. You want to risk no more than 2% of your account balance on a USD/CAD trade, with a 33-pip stop loss. How many micro-lots can you trade?

Number of Lots = ($715) x (0.02) / (33) x ($0.09) = 4.8 = 5 micro-lots (rounded up)

I hope this helps you.

Clint

clint - awesome response, where did you get the $0.09 from in item (3)? is that the price
forex wales

[Clint]

clint - awesome response, where did you get the $0.09 from in item (3)? is that the price…

The $0.09 was the pip-value for micro-lots of USD/CAD at the time that post was written.

As of Friday’s close, my trading platform is showing the pip-value for the USD/CAD as: $9.70 for standard lots, $0.97 for mini-lots, and $0.097 for micro-lots.

Regarding the position-size formula, note that certain terms in the formula must agree, as to units. Otherwise, the formula will give false results.

For example, if you are calculating position size in standard lots, then the pip-value used in the formula must be for standard lots, as well. If you’re calculating position size in mini-lots, then the pip-value must be for mini-lots.

And the pip-value must be in the same currency as the account. If your account is denominated in GBP, then you need to enter the pip-value in GBP for the pair you are trading and for the lot-size you are trading.

[pipwielder]

This Thread is gold. Thanks everyone and especially Clint!