In the case of setups that are based on pipette values,If say i buy at 1.19519 and I set my stop loss at 1.19319,will I say i used a stop loss of 200 pips or 2 pips?
Neither, actually. It will be 20 pips.
āPipsā are the 4th number behind the decimal in nonYen pairs. On Yen pairs, it is the second number behind the decimal.
Ok.thanks for the reply.
Actually mate, it first depends on what instrument you are using
soā¦ letās say itās EUR USD for arguments sake
if you enter at 1.19519
and you stop at 1.19319
MATHEMATICALLY the difference is 519  319 = 200
but mathematics assumes that the SMALLEST UNIT is the 9
so this answer is going to be incorrect
because A PIPPETTE is your smallest unit
but, you are trying to calculate in pips
10 Points / Pippettes = 1 Pip
itās easier to write it like this
Entry 1.1951
Stop 1.1931
so Mathematically it would be like this 51 . 9  31 . 9 = 20 . 0
so basically 20 pips
or you can simplify it like this WHICH IS WHAT WE ALL DO
entry 1951
stop 1931
aka 20 pips difference
keep in mind when you measure it on your crosshair in MT4 it will say 200
BECAUSE THE CROSSHAIR MEASURES IN POINTS
as @Drekieyja has already said
Currency is measured one way,
YEN (also a currency) is measured another way
indexes and crypto Measured another way
soā¦ to get the correct answer we need to know what instrument you use
but, iām going to assume you are using a 5 decimal place Major Currency Pair
Correct me if iām wrong
hope this helps
"or you can simplify it like this WHICH IS WHAT WE ALL DO
entry 1951
stop 1931
aka 20 pips difference"
I think calculating this way is simpler and is what i will make use of.
My currency pair makes use of 5 decimal places as you assumed,yes.
Thanks a lot
I raised this as a different topic but diddnt get any reply.so please let me drop it here cos I need clarification.
Itās on how to use position size and what value to enter as volume when one wants to place a new order.
Letās say these are the values I enter in the position size calculator if my account is a mini account ($10,000):
Account balance : 5000usd
Percentage risk: 1%
Stop loss: 200pips
The result using the calculator is this:
Amount at risk: 50usd
Position size(units)=2,500
Mini lot = 0.25
What I want to ask is this:
When i want to open a new order,where will I enter the position size value?
Secondly,what value will I enter as the volume? Is it 0.25, 2500 or 50usd ?
yeah, i saw that post
ok soā¦ obviously your broker doesnāt deal in Lot sizes, but instead deals in Position or Contract sizes
i had a broker like this onceā¦ it pissed me off and i left
thatā¦ and the fact that they were very dishonest (long story)
anyway
it depends on how your broker is setup as to what you enter
MT4 will ask you to enter LOT SIZES
soā¦ itās handy to have a spreadsheet to work out what you need to enter
ok so
Your Account Balance is $5,000 USD  Cool
% Risk = 1%
ok, this means you are risking $50 USD
Stop Loss is at 200 Pips
ok, this means
$50 divided by 200 = COST PER PIP
therefore COST PER PIP = 0.25cents USD
now before i can answer what lot size this isā¦ YOU NEED TO TELL ME WHAT CURRENCY PAIR YOU ARE USING
but if i was to assume that you are using a NON JPY, MAJOR PAIR like EUR USD
then it would be 0.01 lots = 10 cents per pip
so 25 cents = 0.025 Lots
but, you can only enter lots to 2 DECIMAL PLACES
soā¦ you ROUND DOWN TO 0.02 LOTS
BUT REMEMBER THIS ALSO
You also need to factor in NOMINAL MARGIN for the trade
you canāt just say Iām trading āIām risking $50 over 200 pipsā Noā¦ because your margin
will reduce the amount of your balance
soā¦ it will mean you are actually risking more than 1%
so calculate the margin first
then 1% of the remainder
thenā¦ of that amount (letās call is X)
calculate X / 200
and go from there
does that help you understand it
I understood up to the point u said
Cost per pip = 0.25usd
I am using the EUR/USD pair
From my previous question I said letās assume I am trading with a mini lot (=10,000usd)
How did u get ur value of the lot size as 0.01? And how did u get
0.01 lots = 10cents per pip?
When talking about nominal margin,which margin exactly are you referring to?is it the margin required (a.k.a margin level) or the usable margin (a.k.a free margin)?
But letās assume that my account balance is 5000usd,and my usable (or free margin) is 4000usd, how do i calculate the nominal margin you talked about?
ok, so you HAVE UNDERSTOOD all of thisā¦ right ?
Now did you understand how i came to $0.25 USD
it shouldnāt be hard to figure out
basically 50 / 200 = 0.25
ok, I NOW UNDERSTAND WHY YOU ARE HAVING PROBLEMS
YOU DONāT KNOW WHY 0.01 LOTS IS 10 CENTSā¦ right ?
ok well there 2 ways to do this
THE QUICK AND EASY WAY
AND
THE MATHEMATICAL LONG DOING YOUR HEAD IN WAY
THE QUICK WAY IS
JUST ACCEPT THIS AS A FACT WHEN TRADING WITH EURUSD
0.01 LOTS = 10CENTS PER PIP
0.10 LOTS= $1 PER PIP
1.00 LOT = $10 PER PIP
10.00 LOTS = $100 PER PIP
100.00 LOTS = $1,000 PER PIP
AND SO ON
AND understand that you cannot place a trade any smaller than 0.01 Lots
and there is no such thing as 0.010 lots (meaning, you cannot go to the third decimal place
thatās the easy way
the hard way involves a lot of math that you honestly donāt want to go into and i believe will just confuse your further
so i wonāt go into that now
but i will go to this levelā¦
THESE ARE GIVEN AMOUNTS that are defined by the broker as the CONTRACT VALUE
(STANDARD LOT) 1.00 Lots = 100,000 Units of Currency
(MINI LOT) 0.10 Lots = 10,000 Units of Currency
(MICRO LOT) 0.01 Lots = 1,000 units of Currency
SO Why is 0.01 lots = 10 cents per pip
wellā¦ first look at 1.0 and letās call this 100% Mathematically speaking
Next, What do we have to do to 1.0 to get it to 0.01
ANSWER
if we divide it by 100 we get 0.01 right ?
so if 1.0 = 100%
and 0.01 is 100 times less
then 100% / 100 = 1%
so we can say that a mini lot is 1% of a Standard Lot
we can say that a Micro Lot is 10% of a Standard Lot
and a standard lot is 100% of a Standard lot
make sense
so if a mini lot is 1% of a standard lot
and a standard lot = $10 per pip
then $10per pip / 100 = $ 0.10 cents per pip
THATāS WHY do you get that now
you see, itās just easier to accept it as a fact instead of doing your head in with the math.
NOW LETāS MOVE ON TO MARGIN
LETS DO THIS FIRST
No letās not
becauseā¦ You canāt do that
if your ACCOUNT BALANCE = $5,000 USD
you canāt just come out and say (Martin assume my free margin is $4,000 USD)
Noā¦ Your Account Balance is $5,000
and your FREE MARGIN is also $5,000
THIS IS WHERE YOU START FROM
THIS MEANS YOU HAVE NO TRADES ON
START HERE OKā¦
now
LETāS UNDERSTAND TYPES OF MARGINS
IN MT4
You are going to have something like this in your terminal
this is a capture of a demo account that iām playing with now
but, itāll serve the purpose
so
YOU NOW PUT ON A TRADE
and you see
BALANCE
EQUITY
MARGIN
FREE MARGIN
MARGIN LEVEL%
and you will ask , Why is your BALANCE not moving
ANSWER : this is the Account balance where it was BEFORE YOU OPENED THE LAST TRADE.
It doesnāt move for every price movement
EQUITY = this is WHAT IS YOURS AT THIS POINT IN TIME
SO in this picture the last Account Balance was $760.50
then a trade was put on.
now that trade is at a loss
and IF I CLOSED THE TRADE NOWā¦ MY NEW ACCOUNT BALANCE WOULD BE ā¦$751.74
This number will always move based on how much you are winning or losing.
it represents WHAT IS YOURS IF YOU CLOSE NOW
now
Margin / Free Margin / Margin Level %
Margin is what IS REQUIRED FOR YOU TO OPEN A TRADE
SO in the case of this trade $60.51 was required to open the trade
(this figure is calculated on Lot size, Account Leverage, the Instrument you are using, the Exchange rate at the time and your local currency)
the point isā¦ ITāS SORT OF A SECURITY DEPOSIT if you will
you get this MARGIN (NOMINAL MARGIN) Back when the trade closes
which brings us to
FREE MARGIN = this is what you actually are trading with
itās money that is not tied up .
so if you had an ACCOUNT BALANCE OF $5,000
and the broker said that your NOMINAL MARGIN is $1,000
then your Free Margin would be $4,000
but if your broker said that your NOMINAL MARGIN was $50
then your FREE MARGIN would be $4950
When you calculate risk in a trade, REMEMBER TO CALCULATE IT AFTER FACTORING IN YOUR NOMINAL MARGIN
now
Margin Level%
this one is a bit fiddly to work out (and i do know the formula) but i donāt want to fill your head with crap
JUST UNDERSTAND IT LIKE THIS
its a percentage of your NOMINAL MARGIN
like this
if you have an Account Balance of $5,000
Your Nominal Margin is $500 for the trade
so Your FREE MARGIN is $4,500
Now lets assume you placed a trade of $10.0 Lots ($100 per pip)
and letās say the trade moved against you 45 pips, hence using your $4,500 free MARGIN Completely
AT THIS POINT when
FREE MARGIN = $0
NOMINAL MARGIN / MARGIN = $500
MARGIN LEVEL % will = 100% (this is a very bad thing)
now for every movement into negative from here, YOU ARE USING UP YOUR NOMINAL MARGIN.
When your MARGIN LEVEL % gets to 80% YOU GET A MARGIN CALL from the broker
(meaningā¦ Put More money in so you donāt blow your account)
if your MARGIN LEVEL % gets to 20%ā¦ GOOD BYEā¦ GAME OVER
You see, When you start eating into your NOMINAL MARGIN you need to understand that you are eating into the margin that is the security deposit for the trade
to put it another way
if you are trading a micro lot (1,000 USD)
AND your account leverage is 1:100
Meaning for Every $100 of Currency , YOU PUT UP $1, the Broker puts up the Rest
so on $1,000, YOU PUT UP $10 NOMINAL MARGIN and the broker puts in $990
now if you eat away your free balance
YOU NOW START EATING INTO THAT $10
the broker then saysā¦ HANG ONā¦ this is now getting risky because this stupid person is going to blow the security balance and their account
the broker therefore wants to get out so they donāt lose money
thatās why you get thrown out at 20%
so bottom line MARGIN LEVEL % is an expression (As a percentage) of HOW MANY TIMES MORE THAN YOUR NOMINAL MARGIN do you have as FREE MARGIN
get it
itās HOW MANY TIMES BIGGER IS YOUR FREE MARGIN THAN YOUR NOMINAL MARGIN
so to answer your question
NOMINAL MARGIN IS MARGIN
FREE MARGIN is not Margin
FREE MARGIN is what you have to trade with the Usable margin if you will
so now back to this
if we assume you have $5,000 and there are no trades
Your Equity will be $5,000
Your Free Margin will be $5,000 as well
you now decide to open a trade
well now
it depends what the lot size will be
and what your account leverage is
and what the exchange rate is
and these things will contribute to the calculation of HOW MUCH NOMINAL MARGIN you are required to put in.
and after that is worked out
the Margin level % is then calculated based on that
Thanks a lot for the explanations.I understand it better now.but it has given rise to some other questions:
 since my broker doesnt make use of position size,will i be making use of it any way when I want to trade or itās only useful for those whose trading platform includes that?
2)for the demo account I am practising with the volume size i can trade with are 0.01,0.02,0.03,0.04,0.05,1.00,2.00ā¦,8.00
Does this mean this is the contract value u referred to when u said
0.01 lot (for example) is equal to 10cents per pip?
3)if I have $200 as capital, will it be advisable to trade a micro lot so as risk lesser or can i trade a mini lot?
4)if d leverage is 100:1,margin required is 1%.if the leverage is 50:1, margin required is 2%. What will be the margin required if the leverage is 10:1? I tried getting the value by doing cross multiplication but I didnāt get it right.
 from the lessons in babypips,it was advised that newbies should trade with lower leverages,say 20:1 or preferably 10:1.if using a a leverage as low as that,wonāt that mean that the trader is trading with more of his own money in each trade?
Also entered these values on the position size calculator
And I got this:
So i want to risk only $2 in a trade for a mini lot size,since my broker makes use of volume and not position size,will I enter the volume as 2 or 0.1?
Youāre Welcome
when you are trading in MT4 you will be using LOT SIZES
if you are trading on your brokers online platform , then maybe not
Noā¦ CONTRACT VALUE is how much money is in the trade
CONTRACT SIZE is the LOT SIZE
also. you can enter the amount manually , you donāt need to pick one from the list
Example, you can enter 0.08 if you like
but yes
0.01 = 10 cents per pip
0.05 = 50 cents
and so on
Personally i would advise AGAINST trading with $200 to begin with
because
letās say you use the min lot size of 0.01 10 cents per pip
letās say you put down a stop loss of 40 pips so risking $4
but 1% of the total NOT COUNTING THE NOMINAL MARGIN is $2 risk
so, Youāre already in a bad position
now to stay within the risk NOT COUNTING THE MARGIN
you would need to have a stop loss at 20 pips, which is pretty pointless in some cases
now LETāS ACCOUNT FOR MARGIN
so letās say your NOMINAL MARGIN IS $50, which is really being forgiving
so now you really only have $150 to trade with, and 1% is $1.50
so now your down to a stop loss of 15 pips
my advice do not start with less than $1500
$1k minimum
Margin doesnāt work like that
sometimes it does and sometimes it doesnāt
you need to go to your broker and ask how the margin is worked out for a specific instrument
thatās probably why youāre getting it wrong.
hehe
it was advised that newbies should trade with lower leverage huh
OKā¦ well
Letās look at both sides of the coin shall we
 babypips has a legal responsibity to not say to peopleā¦ GO OUT AND GET THE LARGEST MARGIN POSSIBLE
thats why they said what they said, itās a legal thing
now. TO A POINT ITāS TRUE
the point they were trying to convey TO NEWBIES isā¦ Forex has high risk and Leverage amplifies that riskā¦ THATāS VERY TRUE
and yes the Lower your leverage, the More of your own money you are using
example 1:1 is not a leverage, here YOU USE ALL OF YOUR OWN MONEY
1:2 is the lowest leverage
it means you put in half and the broker puts in half
so letās put numbers to this
if you are in a trade that is $10,000 Units of currency
you put in $5k as Nominal Margin on a 1:2 Leverage account
but, DO YOU HAVE $5000
Noā¦ so its a higher risk from that point if you did have it
so if you have say $1,000 in your account and your leverage is 1:1 you can only control $1000 worth of currency, but they wonāt let you trade that small.
now look at 1:100 Leverage same trade $10,000 Units of currency
you would need to put in $100 as NOMINAL MARGIN
and yet YOU STILL GET TO CONTROL $10,000 Units of currency
Meaning, you get to trade a larger lot size so you can earn more money
meaningā¦ if you put in $100 from your $1,000 in your account
you have $900 as free balance
now if you are risking 1% of your account , you can risk $9
and if you have a stop loss at 30 pips you are using 30 cents per pip
so YOU TRADE A LOT SIZE OF 0.03 LOTSā¦ REMEMBER THATā¦ ok
now same trade
butā¦ 1:500 leverage
same account balance
this time you only need to put in $20
Meaning you have $980 to trade with
meaningā¦ NOWā¦ WATCH HOW THE LOT SIZE IS DIFFERENT
same stop lossā¦ 30 pips
same risk 1% x 980 = $9.80
now watch how the lot size changes
as opposed to 0.03 lots (meaning you make 30 cents per pip) if you win
the lot size is 33 cents per pip meaning 0.033
NOW. YOU CANāT PLACE A TRADE OF 0.033
but THIS PROVES A POINT ANYWAY
USING HIGHER LEVERAGE MEANSā¦

You control more currency, which means you can trade a larger lot size, which means MORE MONEY PER PIP

Now it also means LOWER NOMINAL MARGIN PER TRADE

now this is all good and fair UNTIL YOU UNDERSTAND THATā¦ IT ONLY WORKS IF YOU KNOW HOW TO MANAGE YOUR MONEY AND YOUR RISK
because if you donāt, YOUāLL BLOW OUT YOUR ACCOUNT AND LOSE EVERYTHING
but Assuming you do do it correctly
YOU CONTROL MORE CURRENCY WITH A LARGER LEVERAGE ON YOUR ACCOUNT
try it on demo
open 2 demoās
1 with leverage of 1:10
second one with leverage of 1:500 or higher
open both accounts with $1,000
youāll notice at times on the 1:10 you wonāt be able to place a trade of a certain lot size
but YOUāLL BE ABLE TO PLACE IT ON THE OTHER ONE
this is the point
you get to control more currency and make more money than you normally would be able to do
THATāS WHAT THE PURPOSE OF LEVERAGE IS
Is there more advantage trading in mt4 platform to trading on my brokerās platform?
But if say i use mt4 platform and I want to make a deposit or withdrawal,what will the process be like? How will my broker help me do such transactions if i use mt4 platform because I thought if i trade on my brokerās platform direct,I wonāt have issues with such transactions
If itās volume my broker deals with and not position size,does it mean that if my balance is $200 and I key in 1.00 as the volume,does it mean itās only $1 that I will use for the trade or how is volume calculated with respect to the contract value?
I didnāt really get the calculation of how the lot size ur 0.03. A micro lot
0.01=10cents per pip.
I keyed in these values on the position size calculator and I got this:
How is the lot size 0.03 in your own calculation and not 3 as shown in the images attached?
For 1:100 the margin you used is 1% .what value did you use as Margin for 1:500 to get these values?
hehe
Yes there is an advantage to trading off MT4 ITāS EASIER and more user friendly
Your broker doesnāt help you make transactions , YOU DO THAT
Deposits and withrawing are done through your online client area or whatever they call it
you do that stuff via the online interface
you trade off MT4 or CTrader whichever you prefer
HELL NO
1.00 Lot size = $10 PER PIP
Not $1 in the whole trade
Mate
$1,00
and
1.00
ARE NOT THE SAME THING
itās like saying
$1.00
and
1.00 Kg
ARE NOT THE SAME THING
$1.00 (THIS IS A MEASURE OF CURRENCY)
1.00 LOTS (THIS IS A MEASURE OF LOT SIZE)
1.00 (1 STANDARD LOT) Means you are consuming or making $10 per pip
soā¦ if the trade runs against you by 50 pips YOU WILL MAKE $500
IF IT GOES THE WRONG WAYā¦ YOU LOSE $500
Not $1[quote=āLexzykool317, post:14, topic:129608ā]
if you put in $100 from your $1,000 in your account
you have $900 as free balance
now if you are risking 1% of your account , you can risk $9
and if you have a stop loss at 30 pips you are using 30 cents per pip
so YOU TRADE A LOT SIZE OF 0.03 LOTSā¦ REMEMBER THATā¦ ok
I didnāt really get the calculation of how the lot size ur 0.03. A micro lot
0.01=10cents per pip.
I keyed in these values on the position size calculator and I got this:
[/quote]
ok
well letās do it STEP BY STEP
did you understand thisā¦
if not tell me
Now. did you understand thisā¦ that you are risking 1% of what is remaining
because 1% x 900 = 9
if not ā¦ tell me
Now. UNDERSTAND $9 IS THE TOTAL AMOUNT YOU HAVE TO PLAY WITH IN THAT TRADE
soā¦
itās like this
$9 divided by 30 pips = 0.30 Meaning 30 cents Per pip
NOw, you convert that to lots and itās 0.03 lots
because 0.01 lots = 10cents per pip
so 0.01 x 3 = 0.03 Lots or 30 cents per pip
[quote=āLexzykool317, post:14, topic:129608ā]
I keyed in these values on the position size calculator and I got this:
LOL
BECAUSE YOUR BROKER IS NOT TAKING INTO ACCOUNT THE MARGIN
LOOKā¦
THIS IS WHAT YOUR BROKER IS DOING
You entered
ACCOUNT CURRENCY = USD
ACCOUNT BALANCE = $900
RISK PERCENTAGE = 1%
STOP LOSS (PIPS) AS CHOSEN BY YOU = 30 PIPS
CURRENCY PAIR = EUR USD
so your broker does a stupid little calculation like this
risk percentage x Account Balance = Amount at Risk
soā¦
0.01 (1% ) x 900 = $9 USD
Now if you trade this, You are going to realize when you open a trade that THIS IS NOT TRUE
because they have not factored in NOMINAL MARGIN into the calculation
the way i do it is
Account Balance  Nomainal Margin = What you are really left with
then
Risk Percentage x What you are really left with = Amount at risk
see the difference
THEN WHEN YOU LOSE and you ask your broker
and FEEL FREE TO GO ON CHAT AND ASK THE BROKER WHY THEY HAVE NOT CALCULATED NOMINAL MARGIN
because a trade is not just made up of Risk Percentage
there is a Nominal Margin involved as well
so ASK THEM "WHY DOES THE CALCULATOR NOT FACTOR IN NOMINAL MARGIN"
see what they say
and youāll find that youāll get some BS excuse as to why itās your responsibility to know this
and YOUāLL FIND YOUāLL GET THAT EXCUSE AFTER YOU LOSE YOUR MONEY.
Noā¦
1% is not a Margin
Nomainal Margin is Measured in $$$
Can you explain how itās easier and more user friendly please?
If you donāt have to make transactions through a broker,what is their role in forex trade? I thought some of the things to consider when choosing a broker is a broker that charges less on commission,pip spread etc. I thought of you trade on the platform of a broker that charges less,you will make more profit and pay less for charges.
If i do the trade off MT4 direct, how will the payment for charges attached to trades be charged and paid for?
Also, the plaform I have is the platform from a broker(alpari mt4).I downlaoded mt4 platform yesterday that is not attached to any broker but it was very similar to the alpari mt4 platform.I still saw these same features :
My main concern is the volume feature. I thought I will see position size but I did not.
Can you give me the link I can use to download the General mt4 platform that makes use of position size please?
You didnāt really get me.What shows in the VOLUME option on my mt4 platform is 1.00 and when I use my mobile mt4 app to check it, it shows as $1.00. I didnāt say $1,00.
So from these, if volume is what is used to trade and not position size,how do i determine my position size and does it mean itās $1.00 I used for the trade (based on the use of volume to trade?)
You didnāt really get me.What shows in the VOLUME option on my mt4 platform is 1.00 and when I use my mobile mt4 app to check it, it shows as $1.00. I didnāt say $1,00.
So from these, if volume is what is used to trade and not position size,how do i determine my position size and does it mean itās $1.00 I used for the trade (based on the use of volume to trade?)
I understood the calculation of how it is $9 I can risk.thanks
I understood how you got all these values in your calculation but when I calculated
$9 divided by 30 is 0.3 and not 0.30
Are they the same or did you use 0.30 because 1 decimal place canāt be used for the calculation?
Ok.but on the platform I use, when I log in and I donāt have any open trade,the only values that show are: balance,equity and free (or usable) margin.nominal margin doesnāt show.so how will i know what my nominal margin is?since my platform doesnāt make use of position size but volume?
From your own point of view you advice that someone should open an account when he has at least up to $1000 to be able to trade for large not sizes and use less of oneās money with a higher leverage
But If say someone doesnāt have up to that or someone doesnāt want to risk that much,canāt I say use $200 for example and open a micro account and limit my trade to a micro lot and use leverage to trade for the micro lot position ofn $1000,and not aim to trade for large positons like the standard lot of $100,000 which would be risking too much which such small amount?
Yes, of course you can, and in principle that would be a very sensible and good approach.
But there are two other things you need to know:

The purpose of trading with a $200 account isnāt to make money: itās to gain experience. (Even if and when you get as far as joining the very tiny minority of forex traders who can make a steady 5% per month on their accounts, thatās still only going to be $10 per month, so itās not exactly a moneymaking opportunity!)

Depending on your trading style, $200 may not even really be enough to trade a microlot safely. (If you were trading EUR/USD with a 20pip stoploss, it would just about be ok, because your risk per trade would be 1% of your capital, but if trading with wider stoplosses than 20 pips, your risk would exceed that and $200 wouldnāt be quite enough.)
as laughing charlie already said
yes you can, but you shouldnāt
i would also like to add
if you donāt have $1,000 AS A MINIMUM, you should not be trading forex to begin with.