If you are using leverage of 400:1. Trading EUR/USD at 1.3284. Your bankroll is 1000USD and our bankroll management tells us only to trade 2% per trade, which is 20USD. So its effectively 8000USD a trade with leverage. To calculate the value of each pip we then:
0.0001/0.3284 X 8000USD= 2.436USD per pip.
Is this correct?
Falrly new to the pip calculations so for me its always easier to use factors of 10.
Say 1 also have 1000 dollars and 100:1 Leverage. buying 1 micro lot is 10 dollars or 1$ of account. Each pip is a 10,000 of a euro so is 1000/10000 or 0.10$. Since trading 2 lots each pip for 100:1 leverage is 0.20$. Since you have 4 times the leverage i belive it is just 4 times my pip value giving you each pip is owrth 0.80$.
Maybe someone else can chime in and correct us both.
The pip value of a EUR/USD, GBP/USD, AUD/USD, or NZD/USD position is $1 x (size/10,000).
So, for example, if you’re trading 150,000 EUR/USD (15 mini lots) you’re pip value is $1 x (150,000/10,000) = $15.
Leverage has nothing to do with it other than to dictate how large a position you could take. To get position size you figure out your intended risk, then divide that by how many pips you’re risking to get $/pip, then figure out position size from there.
For example, if you’re risking $20 and you’re taking 40 pips of risk, that’s $0.50/pip. Use the above formula to back out the position size.
$1 x (S/10,000) = $0.50 becomes S= ($0.50/$1.00)/10,000
S = 5000 or 5 mini lots.
Thank you guys so much for replying.
So basically with 1000$ and 400:1 leverage im controlling 400 000$, which in turn is 40 mini lots where 1 mini lot is working at 1$ per pip right?
So that means if we stick to trading 2,5% of our account, 25$=minilot, we’re using good money managment?
You CAN control up to $400,000 with a $1000 account balance at 400:1 permissible leverage. That doesn’t mean you should.
So that means if we stick to trading 2,5% of our account, 25$=minilot, we’re using good money managment?
It’s not that you should be [I]trading[/I] 2.5% of your account (or whatever the parameter is), it’s that you should be [I]risking[/I] that much.