Discussion in 'Forex Trading' started by peilthetraveler, Nov 15, 2009.
Checked my leverage. 20:1
I trade $/pip value anyway.
If you want to risk 2% of your account per trade:
RISK = 0.02 * ACCOUNT BALANCE
RISK = STOP LOSS * POSITION SIZE
Set your STOP LOSS and calculate your POSITION SIZE
Set your POSITION SIZE and calculate your STOP LOSS.
Mine's set at 50:1 but like you say it's all about $/pip value not how much margin one uses, it could just as easily be 500:1 for all the difference it makes!
(Equity x Risk %) / Stop Loss = $ value per pip = trade size.
Example for EUR/USD:
($10,000 Equity x 1% Risk) / 40 pips Stop Loss = $2.50 value per pip = 25k trade size.
Remember this, DEFEND AND PROTECT you capital.
The Ever "este balsero no sabe que rayo esta diciendo" VIPER
take your last 300-500 trades and convert them to a ratio of your + or - divided by your initial risk. (so, if you made 200 points and risked 100 you would have a +2.00.) list them down column a beginning row 2. in b1 place a %; in c1 place a beginning account value. then use column b to multiply the % by the account value by the ration outcome. adjust the account value by that number. repeat.
by changing the % you can see your return curve vs. various levels of risk. you will see the returns increase dramatically, level off, begin to decrease, and will eventually even take a positive edge negative should you risk enough. you can approx your optimal risk and better yet a point to its left at which the curve begins to plateau. as an individual trader i can see no reason to trade smaller than this or near this level.
set standard of living upside markers for yourself and take $$ out of the account once they are achieved. you may wish to start your trading with an active and inactive portion to bolster the account should you start with a large dd.
la vÃbora habla con lengua sabia!
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