Not sure if ICT said this in one of his videos or if it was just something I did. It really helped me a lot. Find out if there is a way to edit the demo account balance and set it to the balance you intend to start trading with. Unless your trading real money then this wouldn’t revilement. This will help you anticipate and not negatively react to normal account fluctuations (Not over trading, over leveraging, ect.)
Say you risk 30 pips per trade at 2% risk.
Account size $1000
Risk per trade 2% of account value = $20 per trade risk.
Using a 30 pip stop loss each pip would have to be worth $.67 ($.67*30pips=$20)
So your trade size would be ~$6700 if you’re trading a pair like eur/usd.
If you close the trade and take profit at 30 pips then your profit is $20 or 2% of your account. Now do that each week for 3-4 weeks per month and it would be 6-8% a month return. With compounding your account grows exponentially because you would keep increasing trade size based on on 2% of account equity.
Using a return of 6% a month you would get this:
1 January $1000
2 February $1,060.00
3 March $1,123.60
4 April $1,191.02
5 May $1,262.48
6 June $1,338.23
7 July $1,418.52
8 August $1,503.63
9 September $1,593.85
10 October $1,689.48
11 November $1,790.85
12 December $1,898.30
13 January $2,012.20
Hope I explained that clear enough.
:57:
EDIT: Dan beat me to it 
Yep, you are right - risking 2% on a trade means taking your balance and multiplying by 2% to get the amount at risk. The you would take the amount you are risking and divide it by the number of pips you are using as a stop loss.
Example using 20 pip stop loss:
$1000 account
Amount at risk: $20 ($1000 * 2%)
Amount per pip: $20 / 20 = $1 per pip
Thus, if you make 20 pips, this equates to $20 profit (20 * $1), which is 2% gain. Similarly, a 60 pip win is equal to 6% gain.
So I think the formula you are asking for is:
[Profit in pips * (Amount risked / stop loss in pips)] / Account balance
Thank you very much dan and puremuscle, that really does clear up things in my brain. So now the question I guess is calculating position size. Since I can’t just change the stop loss arbitrarily to match my risk allowance (because the stop loss location is part of the trade setup calculation - aka relative to some recent S/R level), what I can do is adjust my position size based on how many pips my stop loss is, correct?
So say I’m trading EUR/USD with a demo mini account with fixed leverage of 1:50 (when i trade 1 lot, it roughly translates to $1 per pip). Say I’ve identified a trade setup with a 30 pip stop loss. If my account size is $1000, my max risk is $20. Therefore my dollar per pip for 30 pips has to be ($20 / 30 pips) = $0.67 per pip. And if 1 lot equals $1 per pip, $0.67 per pip equals 0.67 lots. So for this setup, I should trade 0.67 lots…
Did I do this right? This is like basic math but for some reason when there are dollar signs involved it no longer appears like normal math in my head, strange huh…
Thanks for all the help!
Haha no problem! I know what you mean, it can be a bit much to get around. If you don’t want to have to think it out each time, try using this:
Wow… That basically validated everything I’ve been mulling over today about risk and position size. Thank you so much!
I’ve been reading so much, but I’m always nervous when it comes to asking a question. Thanks again
Can I get the link for the download please?
Thanks Pippy for hosting.
I bought at support and sold at resistance, no breakout trades. Of course every now and then price breaks through a s+r level and if that happens you lose the trade. But that’s not a problem because this is not meant to net you huge gains. This is an exercise to learn about support and resistance.
I think when doing this exercise it’s not necessary to risk 2%. Use 1% and even 0,5 % will do the trick.
And i totally agree with Johnny:
:57:
Hello All…
Just a recommendation.
I’ve just discovered Myfxbook and was able to use it this week on my demo account. It syncs up with your existing account (most brokers are supported) and provides you with an enlightening and detailed statistical picture of your trading. I think it is a valuable tool that can help analyze you trading.
I’m very pleased and thought it could be of help to anyone trying to seriously learn this profession.
Those of you that do not know of it, you should have a look… it’s free.
Have a nice week end.
This is a fantastic tool! Thanks for bringing it to my attention. It synced right to my demo account and it is helping me analyze my previous trades. Thumbs up to you.
I am watching everyone saying that uses 20 or 30 pips of stop loss and 20 or 30 pips of take profit, but ICT originally said that the risk/reward should have a ratio of 3:1. This means that if I’m gonna risk 1.5 % on an operation (20 pips for example), I´ll have to take profit at 60? Or should I close half lot at 20 pips and go on with half lot to 60 pips? Sorry my english… =)
Assuming you are trading with 2% risk… split the position in two portions.
For the sake of example let’s agree this example will look at a long in the Cable (GBP/USD):
Buy signal at 1.5400 - risking 20 pips initial stop loss - profit objectives initally suggest a potential to rally to 1.5460-1.548. This would be a possible 3:1 reward to risk or 4:1 respectively.
This is the setup you hunt… now when the long is entered… first profit is taken at 20 pips profit… remaining half, or second portion of the trade, moves to break even. The scenerio implies the possibility we could still be wrong and by taking portions at 20 pips we already paid ourselves 1% return and now hold a riskfree long position.
The second portion if it runs to the 1.5480 level we make 80 pips on the second portion… or 4% return. This equates to a total of 5% return and covers the pitfalls that incorrect profit objectives never seen yet still profiting and controling Risk at the same time.
The emphasis is more on the Risk reduction and moving to a “freetrade” or riskless second portion. No muss, no fuss.
Hope That Helps! :57:
[B]GLGT[/B]
Thank you ICT!! Helped a lot!
Pity could u get the email too?
Chugenemes(at)gmail . Com
Gosh, I wish I could get through all 952 pages of replies to this post in a night, but I think I am gonna just bookmark it and try to read a bit every morning with my coffee. The initial post here is refreshing - I have read over and over to not go near this business without 50K and though I felt it was BS, reading your post made my gut feel better.
this is my first post - feels good to be surrounded by so many pro’s. I hope to make some friends here.
Hey guys. Anybody still has the torrent with the ICT videos for share? Could you send it to rien2008low AT gmail dot com?
Thanks
Does anyone have ICT’s indicators in a pack? I like the look of the Trinity Traders indicator.
I found them earlier in the thread but unfortunately they had been uploaded to megaupload so have been lost
Thanks!
Just a 'lil motivation for those who still wondering if this thread is worth reading (and re-reading) and following the concepts presented here: :27:
GLGT!
Thanks Wally 