Your misunderstanding me.the volume i am referring to is the one that is displayed on mt4 platform when you click on the icon to create a new order as shown in the image attached
The image you attached Is what i want clarifications on as u rightly figured with regards to the quoted text.
1 Like
ok… sorry my bad
YOU ARE RIGHT
IN THIS EXAMPLE VOLUME MEANS LOT SIZE
sorry mate, haven’t slept all night and was a bit tired
i’ll go back to that other comment and edit it.
thanks for pointing this out.
I’ve made the edit mate
thanks for bringing that to my attention again.
be cool
I know
sorry mate, i’ve made the change
you are right, i misunderstood at the time of posting that comment as i was very tired
It’s alright. Apology accepted.I guess it’s because of the stress you didn’t get me well at first.sorry about that.
thanks mate
no it’s not stress, i rarely stress.
it’s Just an oversight
thanks again
Okay if you say so.can you explain the quoted text I attached in my previous Message If you d please?
sorry mate
ok so this…
yes 1% x 900 = 9
Meaning you are risking $9
correct, you are risking $9
i think this part is confusing you
keep reading…
ok
9 = $9 Meaning, YOU SAID you are risking 1% of your total account balance
$9 is 1% of your Account Balance
YOU DO NOT ENTER 9 into the field, because the field is asking for LOT SIZE, Not $ Amount
$9 is just FOR YOU TO KNOW HOW MUCH $$ YOU ARE RISKING
You need to convert this amount to LOT SIZES (And enter that into the field)
which leaves us with
0.01 and 0.03
Now. before you can work out the lot size, you need to know HOW MANY PIPS your stop loss is set at.
WE ASSUMED 30 Pips stop loss
so. You take your $9 and you are spreading it over 30 Pips (MAKE SURE YOU UNDERSTAND THIS)
so 900 cents divided by 30 pips = 30 cents per pip or 0…30 cents
so now
You are risking 1% of your Account balance IN THE WHOLE TRADE
and since your stop loss is at 30 pips… You are risking 30 cents PER PIP
now we convert that 30 cents to LOT SIZES (And this is what we enter in the field)
so the 0.01 LOTS is what i told you so as to make the math easier
0.01 Lots = 10 cents per pip
Now we are trying to find 30 cents per pip
so… 3x More
so
0.01 x 3 = 0.03LOTS (this is what you enter in the field) YOU ENTER 0.03
AND IN DOING SO…
you trade will consume 30 cents per pip
and to reverse engineer this strategy
it means
if your trade runs 30 pips the wrong way
you will lose $9
aka you will lose 1% of your account balance
DOES THAT MAKE SENSE
Yes, It all makes sense now.I have gotten it.thanks once more.I am very grateful.
Please one more thing.what Is the contract value for GBP/USD Pair?
Spot forex doesn’t have “contracts” (you’re thinking of futures, perhaps?).
The pip value of GBP/USD is $10 per full lot, and a full lot represents $100,000 - that’s true for any currency pair in which the second currency in the quote is USD: EUR/USD, GBP/USD, XYZ/USD, etc.
1 Like
Another thing is this:
If i want to state my stop loss for orders such as buy stop,sell stop etc,it won’t be hard to determine what value I want to use as stop loss.but if for instance I want to place the order at market price (I.e. instant execution),how will I be able to state the stop loss since the price will be fluctuating?or does the determination of position size before placing order work for orders such as buy stop,buy stop,Sell stop,sell limit etc
Ok.thanks.noted. @anon81929759 referred to this as the contract value of Eur/USD earlier on.I thought it was different for different currency pairs but you have explained it’s same for all pairs that has usd as the second currency in the pair.thanks
1 Like
Yes, this is true. It’s sometimes not quite as easy with market orders.
You can approximate it (by “being ready”) and always adjust it (the stop-loss, not the position-size!) immediately after entering the trade, though?
Sorry, I’m not quite sure what you’re asking, there.
You should always determine and know the position-size in advance, and you’ll need to know the distance between the entry-level and the stop-loss in order to work out the position-size, won’t you? Otherwise you won’t be able to manage your risk? But one can approximate it? You’ll know just before a potential trade’s coming up roughly where you’ll want the stop-loss?
2 Likes
@Lexzykool317
i didn’t say different for CURRENCY PAIRS i said different depending on the INSTRUMENT you are using
so yes, like @LaughingCharlie said
if you are using Majors (containing USD) then yes they are the same
however if you take something like indexes, like US2000 for example, it will be different
the value of 1 lot in indexes is not the same as the value of a lot in currency
that’s what i mean
sorry for the confusion
1 Like
Alright.Thanks.i have gotten all the explanations so far on all the questions raised.I really appreciate.
ALL GOOD
just wanted to be clear.
No worries
One more question please.
From the example we made use of previously
After deducting my nominal margin I am left with $900 and 1% of that is $9.and my capital left after that is 900 - 9 = $891
If i make profit,my balance will increase to say $999
But if i lose it will b $891
Assume I make profit,for my next trade, to calculate 1% of my balance, will I calculate 1% of what is left of my capital after risking $9,whether I make profit or not (I.e. 900 - 9 = 891)
Or if i make profit of say $9, will I calculate 1% of 999 (I.e. 900+9 =999)
As 1% of my balance I want to risk in the next trade?
You mean $909, I think, rather than $999?
900 + 9 = 909.
Taking 909 as the figure, that will be true only if your R:R is 1:1.
If you’re re-adjusting your risk on a trade-by-trade basis (not everyone does - there are other methods, too), then you’d take the 1% as being 1% of either $891 or $909, according to the outcome of the previous trade.
1 Like
It’s $909 I meant.the for the correction.
Also thanks for the explanations.I really appreciate.
1 Like