hi guys i am using mt4 and i am having difficulty in calculating how much loss will i bear when it hit SL. given example. pair: gbpsgd. lot size: 0.01(in mt4). entry=1.79077. SL=1.75000. TP=1.88000. how do i calculate risk amount???
thanks
Hi, hunter
Entry - SL = risk (in pips)
Risk (in pips) x pip-value = risk (in dollars)
1.79077 - 1.75000 = 407.7 pips (risk)
407.7 pips x 0.10 SGD = 40.77 SGD (risk in Singapore dollars)
(Note: we know that the pip-value in Singapore dollars is SG$0.10, because the quote-currency of the pair you are trading is SGD, and your position-size is 0.01 lot.)
If your account is denominated in a different currency (not Singapore dollars), then you will have to convert SG$40.77 to your account currency to get your dollar-risk.
For example, if your account is denominated in U.S. dollars, then you will use the USD/SGD exchange rate (price) = 1.36988 (currently), as follows:
Risk (in SGD) ÷ USD/SGD price = Risk in USD
40.77 SGD ÷ 1.36988 = 29.76 USD (risk in U.S. dollars)
If your account currency is GBP, you will use the GBP/SGD price to convert risk in SGD to risk in GBP.
And, so forth.
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This is a good way to put it. @hunter, you will need to do is determine your pip value for each trade. You pip value using the variants, will tell you how much would be your profit in currency when you hit TP or SL. You can use a pip value calculator if is available to you.