My problem is actually entering in the trades into MT4. I want to risk only about 2% of my $100K demo account but am not sure if I’m doing it right.
The default volume has a range of .01 to 8.0 What is this range?
Consider that this morning I made a profit of 440 pips (sold EUR/USD at 1.44569 and took profits at 1.44120) but my overall account has jumped by $465…at $100K, thats a return of .5% – somehow I was expecting more than that on 440 pips.
On MT4 you can manually enter the amount you would like to buy.
Let’s go through an example order:
Say you want to risk 2% each trade with your 100K demo (I recommend you demo with a more realistic balance though), which is $2000.00.
Let’s assume that your average stop loss is 50 pips and in your trade you’re looking for 400 pips (Nice risk to reward ratio!).
You want to place a trade on a pair such as GBP/USD (anything xxx/USD will work the same way)
$2000.00/50pips = $40.00/pip.
Well with any pair that’s “xxx/USD” (USD being the quote currency), 1 standard lot is equal to $10.00USD/pip. So if you want $40.00USD/pip, how many standard lots do you have to buy?
Your answer is 4 standard lots.
Assuming your Stop is triggered, you’d be down 50 pips (-50*$40 = -$2000.00 or -2%)
If your target is reached, you’d be up 400 pips (400*$40 = +$16 000 or +16%)
Your risk of 50 pips can be considered “1R” (Risk) and so with a target of 400 pips (400/50) you’re risking 1R for 8R’s. Pretty nice trade!
You got a profit of 44.9 pips which translated into $465 so you’re trading at just over $10 per pip. If you were willing to risk $2,000 per trade then you could have a 200 pip stop loss for this trade. So for that size account you could afford to bump up the volume some more if you wanted to.
Though if you can lower the balance of your demo account to something closer to the size that you would look to go live with you might find it easier in the long run as you get used to the position sizes for that size of a balance.
You should check what type of demo account you opened up - was it a micro, mini or standard account? That’ll determine what the volume actually corresponds to. I’d guess with a $100k balance you opened up a standard account. I’d recommend that you open up a new mini account with a $1-2k balance and get used to using that.
Micro lots = .01 - .09 volume size = 10 cents/pip move * volume
mini lots = .1 - .99 volume size = $1/pip move * volume
standard lot - 1.0 + volume = $10/pip move * volume
(give or take depending on the pair and rounded for ease of example).
Since you have 5 decimals in your price, the 5th position is a pipette so you can basically ignore it in calculating how many pips price moved in your trade. 1.4456 - 1.4412 = 44 pips…yes you’re a bit off…lol. You didn’t specify what your order size was but I would hazard a standard lot (1.0) at $10+/pip move which calculates to = $440 +
