Money management

Ok here is a real beginner Q

How do i calculate the risk i have 1000 dollar account i want to risk 1 procent of that on a trade how do i calculate it i want to place my stoploss 10 pips away how do i calculate how big position i shall buy ?

is there any difference to the pairs ? in the position u buy`?

also will there be a difference if u have a leverage on your account ?

best regards

First find 1% of your account balance, which in your case is 10 (1000 x .01). This is the amount you want to risk on the trade.

Now you want to find out how much to trade, and to do that you divide your risk by your stoploss. So if your risk is $10 and your trade has a stoploss of 10 pips, you divide $10 by 10 pips and get 1 dollar per pip.

1 dollar per pip is 1 mini lot, you you would trade 1 mini lot on this trade (or .1 standard lots, 10 micro lots, etc) to get 1% risk.

This doesn’t take into account the conversion from your account currency to the currency you are trading, so it won’t be exactly 1%, but it will be close enough (between .8% and 1.2%, depending on the pair).

The pair you are trading and the leverage are irrelevant. :slight_smile:

The pair you are trading and the leverage are irrelevant if so what does it mean to have an 100:1 leverage ?

what is one standard account lot i see number quantity £ 50 000 for your usd and total value $ 61790 ??

best regards

Leverage is how much money you need to put up as a “deposit” in order to trade. If your leverage is 100:1 you only have to put up $1000 of your own money to trade a $100,000 position.

Leverage has absolutely nothing to do with risk management if you are risking a set percentage of your account per trade. You could have 20:1 leverage, 400:1 leverage, or anything in between and you would still trade exactly the same lot size in exactly the same way.

The best thing you can do with leverage is ignore it… :slight_smile:

I’m not really sure what you’re asking in your second question? One standard lot is $100,000 (or 100,000 of whatever currency you are trading).

Isn’t that your margin? Leverage is the buying power that you get with your margin.

I totally agree with this, 1:100 would be your available leverage not what you are actually using. If you are using your max available leverage then you are trading very dangerously.

ok the leverage is clear now but i still dont understand how mutch i shall buy

it dont say buy i lot it say buy 50 000 or even more ??

best regards

it was said that for your risk criteria, 1% or 10$ you need to trade no more than 1 mini lot.
1 mini lot = 10.000 unit

also consider what also was mentioned, that the actual value might depend on the pair you trade, so, this risk 1% can be somewhere between 8-12$ in actual reality.

what they might not mention just yet, that you also decide if your risked 1% include the spread, or exclude it…note that 2-3 pips spread is common, and can actually be 20-30% chunk by itself of your risked 1% balance (or 10$)…

if you want to include spread too, and risk 10 pips on SL, then maybe consider a bit less unit…your case less than 10.000.

I think I have seen that before, looks like your trades are denominated in “units”. Not sure exactly how that equates to lots but I would think that 100,000 units equals 1 standard lot. I don’t use that system so I would recommend that you email your broker to confirm the amount before using real money.

BTW, what broker are you using?

cmc market sweden is my broker yes maybe u are right

best regards