could somebody with vivid knowledge explain about how to understand how many pips will blow your account to help with my risk management I have a understanding already but need it to be fully polished
1 Like
It all depends on leverage and lot size. Experiment on a demo account first. Pips costs vary depending on what currency pairs you’re trading, but most USD pairs are stable.
For example, open any FX pair chart with a 100:1 leverage - or 200:1 - which stays static. Then place consecutive orders from 0.01 - 0.1 lot size upwards, and set a static S/L and T/P at 20 pips from the price action. You can move the S/L & T/P around to show your monetary risk by right clicking the dotted line and dragging it up and down on a MT4 or MT5 chart.
When your increased LOT SIZE at 20 pips produces a S/L monetary risk to your account that’s your answer.
Hope that helps.
By the way, I have a 200:1 leverage, lot size of 0.04 per most trades, and risk a max 1% per trade.
So you can see a $100 account is always at risk because you’re not going to just risk a paltry $1 per trade, are you? Whereas, I can risk $30 with a $3K account and lose 100 times consecutively before blowing it…
Have you completed Pipsology? You will find the answer to all basic questions in this free course!