I still demoing and found that my win does not surpass my loss by that much
interms of money.
It was later that i found thta i do not position size my trade.
I always used a 0.3 lot whenever my trade setup is there. Irregardless
of the stoploss whereabout. Although it is always in the range of 20-40pips.
I found that it will impact the profit if i did not size it up.
Does any senior have these software, calculator or excel spreadsheet
that helps me to determine my lot size.
Lets say i has an entry and i know my risk percentage for each trade.
I determined my stoploss pips amount and with all this to determine my lot size to trade. And i can even calculate to enter with several entry such that ewhen my stoploss is hit i still also confined to my that same risk %
Assuming you are using a broker that allows you to fractionalize just take your risk percentage and divide that by your stop loss. That should be your per pip value.
In a good risk/reward scenario your risk reward should be at least 2/1. At least 1/1, but only if your win ratio is better than your loss ratio. So, if you risk 15 pips a trade that is the amount of pips you will either make or lose with a 1/1 risk reward ratio. This could be profitable if you have your wins outnumber your losses and you do not not losses run.
Am I missing something how can both of these be true:
“My risk% per trade is = $5
My risk per trade is = $250”
Did you mean your risk percentage is 5%?
One way to do it is to divide your risk, by your stop loss/take profit to find pip value.
So, if your stop loss is 35 pips, divide $250 by 35 and that is your pip value. Which equals 7.14 cents a pip. 7.14 x35 = 249.90 = the 5% you were willing to risk. Don’t add the spread on top of the stop loss, figure what you are willing to risk on trade. When you get in trade and it goes negative 35 pips you have lost 5% of your account. You don’t have to worry about the spread, once you’ve lost 35 pips you’ve lost 5% of your account.
Sure, the spread is a part of it, but since the spread isn’t always the same you can’t figure for it consistently.
The lot size determines the per pip value. The pip value multiplied by how many pips you lose or win determines your risk on a loss or a profit on a win.
Ultimately it comes down to making sure you only risk x percentage of your account, within the confine of your trading stategy.
So, first you have to find a trading edge. Find out what the proper stop loss, take profit and how much the breathing room the trade may need to go negative before going positive. Don’t just figure you want to risk 5% and then base trades around that, what you want to risk has no bearing on the success or failure of the trade, only if your account can weather the drawdown. You can risk almost nothing to almost your whole account on the exact same trade if you really wanted to.
Sorry, I meant 7 dollars and 14 cents, if you wanted to risk 250 and had a stop loss of 35 pips. In other words risk (250) / stop loss (35) = pip value.
This would required a broker that allows you to fractionalize lots. Then you would just type $7.14 into the size. When you went negative or positive 35 pips you would close the trand either made or lost 5% of your account. (make sure that you know what type of account you are on and that when you type in that number that is what it means, I am on an IBFX micro account. If I type in 7.14 into size it means $7.14 per pip. I can go from .01 to 8.00 a pip. That would mean something different on a regular account. You could still probably trade 7.14 on a regular account, but the fraction would look different. Check with your broker)
It’s easier to money manage and control risk when you use a broker that allows you to fractionalize, rather that trading on a hard lot level and hoping the amount of pips in your TP/SL/breathing room falls nicely into the paramaters of your edge.
sorry to trouble again. pls help me one more time. just got back from work. really need to understand. I think most people already got it.
I currently demoing with fxdd demo. I can see that when i trade the following lot size on the mt4:
it gives me
0.1 lot - every 1 pip movement give me $1
1.0 lot - every 1 pip movement give me $10
So my current demo should be a standard account
so based on the example, with the calculated 7 dollar 14 cents.
Since my current demo is in standard account. I should round off to 7 dollars and trade with 0.7lot. Is that right?
If the account doesn’t allow you to fractionalize into the cents then, yes. With my micro account broker, IBFX, I can fractionalize two place past the decimal. So, I can trade as little as .01 cent or 8.00 dollars a pip, or something in between, like 5.99 dollars. So, you can see how fractionalizing makes it easier to make the risk % fit how a trade set up normally works.
If you are trading with a broker that only lets you trade strict lot sizes it makes it harder to manage risk and money management.
As regarding the risk percentage.
for example, using 2% on 10000 per trade is risk of $200.
for your next trade, is it better to A)use the 2% on the realised account which is $9800. Or still b) fixed it on $200.
I quite confused on this part selection. Some experienced trader choose A
and some used B.
Or this is just personal preference. it seems part b should be more conservative. As you lose more consective trade, your account dropped and therefore you risk lesser. however, the win percetage may decrease.
for your next trade, is it better to A)use the 2% on the realised account which is $9800. Or still b) fixed it on $200.
Depends how much you want to stick to your rules - 2% of $9800 is $196, where as $200 is 2.04%.
What will you do if your account is down to $7500 (2% = $150, $200 = 2.66%)? or up to $13000 (2% = 260, 200 = 1.53%)
I would say this is a matter of preference. If you keep your risk constant, then your gains and losses will be somewhat constant.
When you start to vary your risk (albeit in the above examples we are talking about fractional percentages) you will really have fluctuationg gains and losses.
Depends on your rules and if you have an edge. Some people adjust with ever losing or winning trade. Some people start with whatever their balance is at the beginning of the day and figure from their. Some people figure on x amount of pips won or lost.
Make sure you have an edge though. One that you know you win x out of x times if you trade it strictly. Lets say you have an edge that you know wins 15 out of 20 times. So, you know out of a sample size of 20 you will have five losses randomly distributed. could be five in a row or oddly distributed through 20 trades. Then you would the edges losers would have to be cut short at a spot that the losers don’t eclipse your wins.
Myself I figure on my start of the day balance and stick with that for the day. If lose three in row I either quit or refigure, or if I think my entry was just bad and the big move I thought would happen is actually happening, I’ll stay the same or even up my pip value to make back losses. The last part is only when I’m very sure that I simply entered to early and the move I thought would happen is about to happen.
This is still some relevant with position sizing. Therefore, i will not create another thread.
I was wondering am i trading correctly or is that how most “live” trade.
My Current trading total risk is always $50 which is 1% of my $5000.
Whenever my trade opportunity comes, regardless of whatever stoploss.
Let say the stoploss range was within 20 -60 pips. I always size my $50 to
all these pips. Is that the right way of doing.
Or let say if my stoploss is at 20 pips. Should i just put as risk $20 to it or size it within the $50.
or there is no right and wrong way on that. Pls knidly input some ideas or suggestions on that so that i can improved my trading.
Trading is an art, so that means their really is no right or wrong way.
Their is a logical way though.
First find a stop loss that is gives the trade set up breathing room. A stop loss that is logical based on the trade, not your account or risk threshhold. After you find a good stop loss, then divide your risk over the amount of pips in your stop loss.
Always consider your risk first. If you can’t accept the risk you shouldn’t take the trade.