Hi forex peeps,

Finished all the courses in Pipsology school and been on demo accounts for a month now. I just have a question I’ve always been confused in. Appreciate if someone can help me.

[B]HOW DO YOU COMPUTE FOR THE POSITION SIZE IF BASE CURRENCY IS USD AND COUNTER CURRENCY IS JPY???[/B]

I know there are position sizing calculators around but I don’t want to blindly use those. I want to have a mental grasp on the computation. Repeatedly checked Pipsology school and other websites but to no avail. MY COMPUTATION DOESN’T MATCH WHAT THE CALCULATORS SHOW. HELP, I DON’T KNOW WHERE MY MISTAKE IS.

Firstly, I know the formula when [I]USD is the base currency[/I] is:

[B](account balance x risk percentage x counter currency conversion rate) / stop loss in pips

then multiply the resulting amount by the value per pip[/B]

This formula seems to work with pip movements of 0.0001 for example:

[I](I have color coded some of the numbers so you can easily and visually track where it came from)[/I]

USDCAD 1.33358

Account Balance of USD 5,000

Risk Percentage of 10.00%

Stop loss in pips of 50 pips

(5,000 x 10.00% x 1.33358 ) / 50 = 13.3358

13.3358 x (pip value of 10) = 133.358 or [B]1.33 lot[/B]

THIS IS CORRECT EVEN IF COUNTERCHECKED WITH BABYPIPS FOREX CALCULATOR.

[B]But when I use this with JPY. I DON’T KNOW BUT THE FORMULA MALFUNCTIONS LIKE MY BRAIN!!!

[/B]EXAMPLE:

USDJPY 120.55

Account Balance of USD 5,000

Risk Percentage of 10.00%

Stop loss in pips of 50 pips

(5,000 x 10.00% x 120.55 ) / 50 = 1,205.5

1,205.5 x (pip value of 1,000) = 1,205,500 or [B]12,055 lots!!![/B]

This can’t be because when I checked with Pip calculator, the position size should be 120,550 units or [B]1 lot[/B]!!!

[B]PLEASE HELP ME, I CAN’T FIGURE THIS OUT I’M GETTING INSANE!!! :17: :17: :17: :17: [/B]

[I]*BTW, this is how I arrived with the value per pip = (pip size x lot size). So with the USDCAD example, value per pip was computed as (0.0001 x 100,000). Okay? With USDJPY, I computed it as (0.01 x 100,000).[/I]