If I have a specific risk and stop loss in pips and use that to calculate a specific pip value (say $9 per pip for example), what is an easy formula for calculating how many lots I should be trading with? Thanks!
Sorry, in order to attempt an answer to your question, I need you to give a more complete example of the trade you are trying to set up.
The example I was given was this:
$50,000 account with 2% risk = $1,000 risk
In the example I’m using the ATR to determine my stop loss and risk, so say the ATR is 71. To find my stop loss I’m multiplying the ATR by 1.5, so 106.5, rounded to 106, is my stop loss in pips.
Risk \ stop loss = pip value…1,000 / 106 = $9.43 pip value.
So I basically need to calculate how many lots I need to trade with so that I’m trading $9.43 per pip.
I use a pip calculator website
Hi Gino,
Have you considered taking this information, plus the pair you intend to trade, and just plugging it all into the Position Size Calculator ?
That’s way more convenient than using a formula to do the calculation by hand.
If you intend to trade EUR/USD in a USD-denominated account, for example, here’s the result calculated by the Position Size Calculator –
These results are given in several decimal places, so you will have to round them down so as to stay within your desired $1,000 risk limit.
Example: If your platform allows you to trade in mini-lots, but not in micro-lots, then you will round your position size down to 9 mini-lots.
If your platform allows you to trade in micro-lots, then you will round your position size down to 94 micro-lots.
This rounding will reduce your risk-percentage (to something less than 2%) which will reduce the dollar-amount of your risk (to something less than $1,000) – but that’s as close as you can fine-tune things, with either the Calculator or a formula.
Since you will have to round things down at the end of the calculation anyway, there’s no need to round your desired stop-loss at the beginning. Just plug 106.5 into the Calculator, where it asks for your stop-loss in pips.
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Thank you!
I use forex calculators provided by the brokers in the forex market. That is more convenient.
Using forex calculators or these pip calculator websites are much easier alternatives than doing all the calculations by yourself. It becomes a very tedious task.
I can understand it very well. These calculations need to be accurate otherwise it can result in you making wrong decisions and if that happens, you might suffer loss. From the time I am using them, I feel everything is a lot more easy and a lot of my time is saved. I have used the forex calculators of Turnkeyforex and ICM. Which ones do you use?