Hi!
Here is what I’ve constructed in Excel based on reading some Money Management articles.
The calculation below is presented for a micro account:
[B]INPUT[/B]
Account Size: $9000
Stop Size (pips): 50
Risk: 2% ($180)
1 lot size: 1000 units
Pip Value: $0,10/pip
Stop Size * Pip Value: $5,00
[B]OUTPUT[/B]
Position Size: 36,00 lots
"Round Down" Position Size: 36,00 lots
True Leverage: 4:1
Resultant Pip Value: $0,40
In order to respect your MM you have to take the following position:
Leverage * Position Size: $36.000
The PIP value is: $3,60
The only thing I’m not sure of is the calculation for the PIP value… I have calculated it like this:
(Leverage * Account Size) / 10.000 or (4 * 9000) / 10.000 = $3,6
Is this correct or is the last calculation wrong? I’d be very thankful if someone could explain this to me.
Thanks!