How to calculate position size with more than one trade?

For example, I want to go long EURUSD and also long CHFJPY.

  1. if I want to split my capital to 50% into each trade, should I input half of my account’s balance in calculating the position size for each?
  2. How would the different margin requirements affect that?
  3. If I don’t want to risk more than 1% of my TOTAL account value on a SINGLE trade, should I then risk 2% of the amount I input in calculating the position size (which is 50%)?
  4. I know that it’s a bad idea to trade the same pair twice as I’d be over leveraging it (e.g. buy EUR/USD and short USD/JPY), but what’s the general “rule” with correlated currencies?

Thank you

Dont split your capital into 2 for 2 trades. Just risk a set % of your account per trade eg 1-2% per trade. So 1% risk in EU and 1% risk in CJ.

Depends on your leverage and brokers margin requirements. But yes the more trades you put on the more your margin will reduce until a point comes that you cant add any further positions at the same time.

I didn’t quite understand this. If you want to risk 1% per trade then just risk 1% of your whole account. So in 100k your 1% risk is 1k per trade.

You may have to get a few peoples opinions on this one. It’s not necessary that just because EU is rallying that UJ has to go down. The usd can be weaker against euro but there can be other news making it stronger than jpy. This is something youd have to test out and use your experience. Personally, I only trade currencies in the same direction, so if I’m buying usd then I’m looking to buy on other pairs too. However it’s not binary in that this doesnt mean it’s right or wrong. It’s just how I trade.

  1. Incorrect question (probably stated incorrectly) Multiple trades become a kind of single position which take up some margin (according to your leverage). When margin drops to 50% (doesn’t matter was it a sharp move on your first position/second position/on both) you get margin call.

Pay attention to margin level (expressed in %), basically it shows what percentage is your floating P/L on the combined position from initial margin .

Here is an example:

Suppose your capital is 500 USD. Leverage is 1:100. (50K USD max buying power)

You attempt to allocate 250 USD to EURUSD and 250 USD for CHFJPY.

250 multiplied by 100 is 25000 USD or approx 25000/1.10=22720 Euro (0.227 lot of EURUSD). If you open this this position (0.227 lot), brokers takes half of your initial and your margin level is 200% (500/250 multiplied by 100%).

If price on EURUSD goes against you, you start to have less than 250 USD in free margin so no longer able to allocate 50% of your initial trading capital (500 USD) to CHFJPY trade. You have to focus on your current free margin and its floating variable.

As you may have noticed another free variable you have to choose is desired margin level. Maybe you want to keep margin level on 200%, 300% then you have to choose smaller lots.