Hello to you all, hope you all well and profitable like i hopefully soon will be.
Im having issues with over trading by pips, by this i mean i need a 1057 pips on a 0.01 lot on audusd pair to win £7.48
Now if i target 100 pips its about £0.88.
i have the same issue on gold and not sure how to upload a video to show you
Thank you all
Hi Mark, and welcome to the forum.
I have read your question three times and realize I don’t understand what the ask is. Can you try to find a different way of asking a question, or a series of questions, that may make your request understandable?
hi sorry about that.
firstly I’m on a live account £50 and i realize i cant place large lots i know 0.01 what i wanting to start on.
But 100 pips is like 0.87p so im finding it difficult to profit cause taking 0.87p each 100 pips is taking to long and risking to much waiting for reversal.
if i can private message you a video would be easier i can’t upload on here to show you
thanks for replying
I think at this early stage in your trading career you might find spreadbetting a simpler option for accessing the forex markets.
The size of your position is simply pounds per pip. Minimum forex positions are at 10p per tenth of a pip.
hiya tommor.
can you explain little more on your reply please, sorry new to all this but need to learn as much as i can
Hi Mark,
Thanks for the second attempt. I now understand you. In time, if you follow the BabyPips school of pipsology, you will find answers to how to calculate risk size, trade size and PIPs gain or loss in the training literature.
I have been at this on and off for about 15 years (more off than on), but I wondered if you had looked at the big picture and if your initial expectations are set way too high.
When you say you are on a live account £50, I take that to mean that you have transferred the sum of £50 to a live account with a broker. Is that the total size of the bank that you are allocating to your initial Forex trading account, or is your theoretical bank larger than that and you have just decided to transfer a proportion of your bank to open the trading account to start with?
The reason I ask, and you may not have got this far yet in planning, is that without knowing what fund size you are intending to allocate, it is not possible to determine what risk this one trade represents. For example, if your take profit objective is a 100 PIP gain, how does that relate to your £ risk for the trade? Are you risking 100 PIPs, 50 PIPs, 20 PIPs ? If your 100 PIP profit objective is against a risk of 100 PIPs, then your risk reward ratio is 1:1. If your risk is 20 PIPs, your risk reward ratio is 1:5.
Your plan should go like this:
What is the size of the funds I wish to allocate to Forex trading in this account?
What is my risk appetite? Do I want to allocate 1%, 2%, or more of my fund to each trade? Eg. Your fund size is £100, and your risk allocates 2% of your fund to each trade. Your risk should therefore be no more than 2% of £100 or £2. If your stop loss is to be 100 PIPs, then your risk per PIP would be £2.00 / 100 = £0.02. This may be below the minimum value for your broker.
I will not ask any further questions unless you tell me I am on the right track and the information above has been useful.
On a higher level, did you have an expectation of how much profit you would aim for from a £50 allocation to account? An annual profit of £10 (20%) would be an admirable (and realistic) goal for a first time Forex trader. If you seek returns far higher than that, or more quickly than waiting for a 100 PIP move in the right direction, you would need to either increase your bank (not recommended for a beginner) or move to a shorter timeframe (not recommended for a beginner). Think about it - if your goal were to make £500 this year from your £50 bank, then anyone with a £100K bank would be looking to make £1M profit with the same objectives. In my opinion, not impossible, but as unlikely as buying a lottery ticket and taking a £1M win on the first ticket.
so seem im working pips out wrongly.
That £50 is in my broker account i use to trade.
i sort of understand what you mean, but also i think im working pips out wrongly maybe. as i thought my trade im in now was on over 100 pips and its not its like 40 or 50 not sure havent looked, but on my terminal when i drag my position to my sl and tp it says 100 pips around 0.70-0.80 pips so i assume thats 100 pips why i end up looking for 1000 plus pips in theory its not
Hi Mark,
thanks for getting back to me quickly. You can either let that trade run if you are absolutely sure that the stop loss you have set is not going to wipe out your account, or get out of the trade quickly, and do this kind of stuff on a demo account not a live account. Lack of understanding of how much is at risk could be catastrophic, even if only to lose £50.
This industry has a habit of unnecessarily complicating things that are actually simple. It feeds into the glamour of the so called “experts” in making Joe Public think he has to be a rocket scientist to navigate this stuff.
Always, always think in terms of % gains, not PIPs. Please look up the ATR (average true range) if you are not already familiar. Even within currency pairs there is a large range of ATR depending on the pair. Perhaps one is 75 PIPs per day, another is 300 PIPs per day. If you think about it, setting a PIP target is not the same as setting a % target and you could be risking more than you intended by thinking in terms of PIPs and not in terms of £ profit.
Even if you have to work it out on a piece of paper, my advice is always to use the ATR (14) as a reference to what is the daily variation expected, as a percentage of the current price of the currency pair, and set your stop loss at a multiple of the ATR (some use 1.5 ATR, some use 2sATR, some use 1x ATR. Then calculate what that is in PIPs. For example, if the GBPUSD is 1.4000 and the ATR(14) is 0.00980, the ATR as a % of 1.4000 is 0.007 or 0.7%. If you set SL at 1.5x ATR (0.105) that is 105 PIPs because a PIP is a Percentage In Point, or 1/10,000 of the 1.4000. With a SL of 1.5xATR, you may wish to set your TP at 3 times that risk (105 x 3 PIPs) or 315 PIPs, which is the equivalent of 1.4000 + 315/10,000 = 1.4000 + 0.0315 or 1.40315. Stop loss is 1.4000 - 100 PIPs or 1.4000 - 0.0100 = 1.3900.
I hope the above (if you do this 100 time over once for each trade in future) will become like clockwork and does not make it look more complicated than it is. After thousands of Forex trades, I find myself doing this mentally. Rarely do I make mistakes, but with the JPY being about 100 times what a EUR is to a USD, it is better to be safe than sorry.
i need to do some more homework for sure on risk management definitely
i normally risk around £1 per trade
OK that is good to know. If you are comfortable with that, it is my opinion that you will gain more knowledge more quickly by persevering with this small account than reverting to a demo account only. But do use the demo account just to get used to the mechanics of placing trades. It may prevent a bad mistake in your live account that would damage your psychology and cause you to fear a repeat mistake. Best to trade demo to get rid of all those uncertainties until putting a trade on is like jumping in your car to go to work - completely automatic.
Search results for ‘risk management’ - BabyPips.com Forex Trading Forum
Try the Search topics, posts, users or categories - the magnifying glass next to your avatar to the top right side of the screen. Also look at the index in School of Pipsology on risk. This is normally a sub-topic of “money management” in Forex trading learning.
What’s your trading account amount? Not intending to pry but I believe that the trading accounts of less than $100,000 stick to the 1% rule. However, you can opt for 1.5% or any other percentage that falls under 2%.
I think your 1% rule is just fine. I trade with this strategy in mind and my capital losses especially when I had an off day were minimum. What kept me sailing was the returns.
Tweak it if you’re planning to change your strategy or if it goes well with your account size. Simply set a percentage that you’re comfortable risking and then calculate the position size.
For me it’s a chance to withstand the losses and end of the month realizing that my capital amount instead of dropping, increases quickly. It’s been working just fine with turnkey forex so far and after 3 years, I don’t plan on changing it.
