Understanding Pips/$$$/Risk

EDIT: FIGURED IT OUT…BAD MATH :slight_smile:

Hey All,

I’m trying to make sure I have a good understanding of pips, money, and risk.

I don’t understand how to convert pips to a dollar value to ensure I’m not breaking my 1% per trade rule.

Using the school’s example…

USD/CHF:

        1.5250
        .0001 divided by exchange rate = pip value
        .0001 / 1.5250 = 0.0000655
  • for $1 US, each pip is worth $0.0000655?
  • But if I have bought a mini lot I need to x10,000, so $0.655?
  • And I’m leveraged 100:1, so $65/pip?

What am i not getting? If I had a $10,000 account a movement of 2 pips would be breaking my 1% rule.

  • Am I calculating wrong?
  • 1% is too low
  • Over leveraged?
  • Or buying to large of lot sizes?

I see this problem often. It would suck to do this on every trade. So I made a spreadsheet using real time data to calculate the max. position size with respect to various pairs versus different account base currencies.

I posted it online for my own use. You can use it as a template if you’re interested.

My quantisan.com/tools/forex-position-sizer/