Hello All ~ I am new to BabyPips.com! I have been working on my position sizing for the last three weeks… I can’t seem to get my decimals together… Does anyone have any suggestions on moving the decimals to get my position size?? My apologies… I should know this right?? I am struggling with this… Thanks everyone for all of your help!!
Hello, and welcome to this forum.
I’m not sure which decimals you’re talking about, [I]so I’ll just wade in anyway[/I] and talk about all the decimals involved in determining position size.
• [B]First off, decimals are frequently used in specifying fractions of a standard lot. [/B]
Just to review, a standard lot of any currency pair is 100,000 units of the BASE currency. So, a standard lot of GBP/USD, for example, is 100,000 units of GBP (that is, £100,000).
Most new retail forex traders trade smaller position sizes than one (or more) standard lots. These smaller position sizes can be specified with names – like minilots (10,000 units), microlots (1,000 units), etc. – or, they can be specified as fractions of one standard lot (in which case they appear as 0.1 lot, 0.01 lot, etc.).
One minilot is 1/10 of a standard lot. Expressed as a decimal, this is 0.1 lot. Sometimes, traders will drop the word [I]lot[/I] altogether, and just say the position size is 0.1
One microlot is 1/100 of a standard lot. Expressed as a decimal, this is 0.01 lot (or, simply, 0.01).
Some traders and brokers refer to a nanolot position size. This is 1/1000 of a standard lot (that is, 100 units of base currency), expressed as 0.001 lot (or just 0.001).
• [B]Next, there are decimals in currency pair prices.[/B]
Originally, currency pairs (except yenpairs) were priced in 4 decimals, and looked (typically) like this: 1.2345 (where those digits are arbitrarily chosen as an example).
Note that there are 5 digits, but only 4 after the decimal point. Hence, the [I]4decimal[/I] designation.
In this example, the 5 in the 4th decimal place represents 5 pips; the 4 in the third decimal place represents 40 pips; the 3 in the second decimal place represents 300 pips; the 2 in the first decimal place represents 2,000 pips; and the 1 to the left of the decimal point represents 10,000 pips.
If the price in our example were to increase by 3 pips, it would become 1.2348. If that price were to increase by 20 pips, the price would become 1.2368. And, if that price were to increase by 100 pips, it would become 1.2468.
Altogether, those increases total 123 pips. We could show the math this way:
1.2345 (the original price)
+ 123 pips
1.2468
Yenpairs originally were priced with 5 digits, as well. But, 3 of those digits were to the left of the decimal point, and only 2 digits were to the right. This was referred to as [I]2decimal yenpair pricing.[/I] A typical yenpair price looked like this: 123.45
In this example, the 5 represents pips, the 4 represents tens of pips, the 3 represents hundreds of pips, etc., just as in the nonyenpair prices.
So, if this yenpair price were to increase by 123 pips (as in the previous example), the math would look like this:
123.45
 1 23 pips
124.68
A few years ago, another decimal place was added to currency pair pricing, making the prices in our examples above look like this:

for the nonyenpair in our example, 1.23456

and for the yenpair in our example, 123.456 (again, these digits are arbitrarily chosen,
for the sake of the example)
This is referred to as [I]5decimal pricing[/I] (for the nonyenpairs), and [I]3decimal pricing[/I] for the yenpairs.
The last digit – the 6 in these examples – represents 1/10 of a pip.
Suppose the price of a nonyenpair is 1.23456, and it increases by 123.3 pips. The price would then become 1.24689
And if a yenpair price was 123.456, and it increased by 123.3 pips, it would become 124.689
• Finally, if it helps you to do the math with these numbers, you can write a price such as 1.23456 as 12,345.6 [I]pips.[/I] So, you could say that the current price of the GBP/USD (1.29765 the last time I looked) is 12,976.5 [I]USD pips[/I] – and this is a mathematically valid way of expressing the price (although not a way that’s normally used).
If you write a price in this fashion, you can add or subtract pips from the price, keeping the decimal points lined up.
For example, if the GBP/USD price (1.29765) were to increase by 137.9 pips, then we could show the math this way:
12,976.5 USD pips (the original price)
+ 137.9 pips (the price increase)
13,114.4 USD pips (the new price [I]in pips[/I], which we would normally write as 1.31144
I hope that wasn’t too tedious, and I hope it helped you.
.
Nice lesson! Could you clarify this point for me please.
I have just opened a demo account, with $1000, and put a trial trade just to understand trading.
Here are the numbers from my history for that first trade.
My Account: Currency: USD Leverage: 1:200
Type = Sell
Size = 0.01
Item = cadchf
Price = 0.72209
S / L = 0.72333
T / P = 0.72088
Close Time Price = 0.72333
Profit = 1.25
My questions are these:
(a) What is the $ value of 1 pip in my trade?
(b) How did they arrive at the figure of $1.25 as my loss?
C) If I wish the loss to be 12.5 instead of 1.25, what parameters (such as leverage or margin or size etc) that I need to alter please. [Not that I want the 12.5 loss, but just to understand the maths]
I hope this isn’t a silly question.
Thanks and cheers.
There are no silly questions.
Unfortunately, sometimes there are silly answers, especially here on the internet. (I will try not to give you any silly answers.)
Regarding your questions:
B[/B] The pipvalue for this trade is $0.1013 according to the Babypips PipValue Calculator.
Here’s what it looks like, with the relevant info entered, and the pipvalue calculated:
B[/B] The open P/L on your trade (the loss on your open position as of Friday’s close) was 12.4 pips. I’m assuming that you can verify that figure, using your entry price and Friday’s closing price.
12.4 pips x $0.1013 = $1.25612, which would round off to $1.26
The difference between the dollarloss of $1.25 quoted by your broker and the dollarloss of $1.26 calculated above is likely due to a slight difference between the pipvalue calculated by your broker and the pipvalue calculated using the Babypips calculator. If your broker used a pipvalue of $0.101 (rounding it to 3 decimal places), then 12.4 pips x $0.101 = $1.25 (as quoted by your broker).
There’s one other possibility. The pipvalue calculation depends on Friday’s closing price for the USD/CHF. It’s possible that your broker’s USD/CHF closing price was different from the price (USD/CHF = 0.98710) which I took from the [I]Rates[/I] page here on the Babypips site.
B[/B] Your loss would have been 10 times as large (that is, your loss would have been $12.50), if your position size had been 10 times as large (that is, one minilot, instead of one microlot).
Hope that clears things up for you.
Cheers.
.
Dear Clint, Thanks for taking the time to reply so well.
(a) So, do you mean by the quote above that I should ‘mock deposit’ $10,000 in my demo account instead of $1,000?
(b) What if, instead of that, I were to use the size as 0.1, rather than 0.01? (Is that permitted with the existing $1,000)
(I am showing my ignorance/confusion here, I think)
Cheers
Clem, my friend, fasten your seatbelt. I’m going to talk to you about demo accounts.
[U]The purpose of a demo account is[/U]
• to teach you to [B]master your broker’s trading platform,[/B] so that you can

navigate the screens,

adjust the charts to display what you want to see,

place (and cancel) all the various types of orders,

and move manually (and efficiently) into and out of positions, without making mistakes
• to provide a setting in which you can [B]study and experiment with[/B]

measuring tools (S/R lines and zones, trend lines, pivot points, fibonacci retracements, etc.)

and indicators and oscillators (moving averages, RSI, stochastics, MACD, etc.)
• to provide a setting in which you can

explore trading methodologies and strategies,

choose the one (or ones) that are right for you,

and learn to trade [I]tiny makebelieve positions[/I] profitably and consistently
[U]The purpose of a demo account IS NOT[/U]
• to make large sums of [I]makebelieve money[/I], pretending you are trading currency pairs
You should carefully (and honestly) consider how much money you will initially commit to live trading, [I]when the time comes to move to live trading.[/I] I suspect, in your case, that figure might be $1,000 – because that’s the amount you chose (consciously or subconsciously) to start your demo account.
Whatever figure you decide upon for eventual live trading, start your demo account with that amount, or less. Do not “fund” a large demo account, thinking you will fund a small live account later.
Get comfortable with tiny amounts – a tiny initial account balance (demo now, live later), tiny position sizes, tiny profits, and [I]tiny losses.[/I]
Your objective at this stage of your forex career is to learn to how to be consistently profitable (weekafterweek, if possible), [I]monthaftermonth, for sure.[/I]
Your objective IS NOT to wheelanddeal with large sums of [I]fake money,[/I] committed to large [I]fake positions,[/I] in the hope of scoring large [I]fake wins.[/I]
After you prove to yourself that you can trade a tiny (makebelieve) demo account profitably and consistently, then you will be ready to open a tiny live account, and prove to yourself that you can continue your demo success when actual money is on the line.
And finally, after you have proven to yourself that you can handle the realities of [I]real money[/I] profits and [I]real money[/I] losses, then you will be ready to increase all the numbers – your account balance (with additional deposits), your position sizes, and your profits (and your losses).
So, forget about making adjustments in your demo account balance, or in your position sizes, just to make the numbers look bigger. Doing that wouldn’t impress me, or any other trader here on this forum.
And it shouldn’t impress you, either.
.
Hi there Clint ~ The information that you have provided was great! The end of your post is more of what I am looking for… I understand the Target, Entry and Stop… I can find the difference between entry and stop… I can determine how much I am risking but now when I go in divide my dollar risk into my difference between entry and stop is where I am missing the mark!!! My numbers seem HUGE??? I am not really feeling that confident about my calculations and it is in this area that my decimals are off (I apologize for miscommunicating that) but this is the area that I need to know how to move my decimals for the position size? For instance, I was looking at the GBP/USD I was going to buy it… My Entry is at 1.2845… My stop is at 1.2311… The difference is 0.0534… My risk size is 20.00 and I divide 20.00/.053??? Then I get 377.36 or 377… I would use the PIP Calculator and get 0.1 but when I get 377/.10 = 3,770 lots??? I sure hope I am saying this correctly. Thank you for all of your help!
Hello, again
You buy GBP/USD at 1.2845 with a stop at 1.2311 — that’s a 534pip stop.
It’s your intention that a 534pip loss should cost you $20.
Let’s think about that for a moment, before even going into the Position Size Calculator.
If 534 pips is worth $20, how much is one pip worth?
Let’s convert $20 to 2,000 cents. 2,000 cents ÷ 534 pips = 3.75 cents per pip.
Microlots (0.01 lot) of XXX/USD have pipvalues of 10¢.
So, you are proposing to trade 3/8 of a microlot (that is, [B]375 UNITS[/B] of base currency).
Now, I’m going to use the Position Size Calculator to check what we’ve just worked out in our heads.
How can I do that without knowing your account balance, and your risk percentage? Simple. I’ll just make up numbers which correspond to a $20 risk. I’ll use $1,000 account balance, and 2% risk percentage.
Here’s how it looks with the numbers plugged into the Calculator, and your position size calculated –
I hope that answers your question.
Cheers.
.
Hi Clint,
Sorry if you felt I was trying to impress. I wasn’t. I am just trying to get to grips with the terms and figures that I am feeling confused about. For example , your statement that " Your loss would have been 10 times as large (that is, your loss would have been $12.50), if your position size had been 10 times as large (that is, one minilot, instead of one microlot"
If I keep the size as 0.01 (ie, $1,000), then what parameters do I need to change at the start of the trade to make the loss equal $12.5 for my trade?
Clem,
Think about your question.
The dollarloss you are asking about is determined by 2 factors:
B[/B] the piploss (12.4 pips) from your entry price to Friday’s closing price, and
B[/B] the pipvalue ($0.1013 per pip) [I]which, in turn, is determined by your position size (0.01 lot)[/I]
[I]You can’t change the piploss.[/I] It was determined by the market.
If you hold your position size at 0.01 lot, then [I]you can’t change the pipvalue ($0.1013 per pip).[/I]
Therefore, the answer to your question is:
[I]There are no parameters which you could have changed at the start of the trade, in order to alter the size of your loss (in dollars), if you insist on holding your position size at 0.01 lot.[/I]
That’s why I said, in my previous post:
“Your loss would have been 10 times as large (that is, your loss would have been $12.50), [B]
if your position size had been 10 times as large[/B] (that is, one minilot, instead of one microlot).”
That would have been the [I]only[/I] way to alter the size of your dollarloss.
.
Ok, thanks. I get it now. Cheers.
On another matter: Today while live trading on the MT4 platform, the indicator lists behaved strangely for a few times. When I clicked to get some indicators on the graph, different indicators showed up on the screen. When I tried to get the moving average, I got the MACD and when I clicked on Stochastic indicator, I got ATR! I then refreshed the platform after which it all worked correctly. My question is does this happen sometimes or has it happened to anyone before?