MoneyTec Traders Community Forum - View Single Post - How much to buy w/2% risk of $1k and w/50pip SL?

kenazen · 26-12-2005, 04:08

Hello,

I'm trying to figure out how to manage money.

If I have an account with $1,000.00, and I am willing to risk 2% on a trade, then I would need to set my stops so that I would not lose more than $20.00 on the trade ($1,000.00 * .02 = 20.00).

Let's say I believe the EUR/USD is going to drop, and it is qouted at 1.1859 (as it is right now). I also believe that I need to give it 50 pips of freedom for whipsaws.

The challenge is to figure out how MUCH of EUR/USD to short. I am using Aonda, so this value should be expressed in units.

I've been looking at this website, and trying to make sense of it:

http://www.babypips.com/forex-quicks...-your-pls.html

"EUR/USD at an exchange rate of 1.1930
(.0001 / 1.1930) X EUR 100,000 = EUR 8.38 x 1.1930 = $9.99734 rounded up will be $10 per pip"

For the EUR/USD right now:

(0.0001/1.1859) * (1.1859 * 100000) = $10

This forumla would seem to always produce a pip value of $10 for pairs using the USD as the "qoute" price. Is that correct?

Knowing that my stop should be at a $20 loss, and a pip is worth $10, then it would seem I could only set my stops at 2 points instead of 50. Then again, its 4am, lol.

Any suggestions?

26-12-2005, 04:08	#1
kenazen level 1 Join Date: Dec 2005 Posts: 49 Downloads: 0 Uploads: 0 Rep Power: 3	How much to buy w/2% risk of $1k and w/50pip SL? Hello, I'm trying to figure out how to manage money. If I have an account with $1,000.00, and I am willing to risk 2% on a trade, then I would need to set my stops so that I would not lose more than $20.00 on the trade ($1,000.00 * .02 = 20.00). Let's say I believe the EUR/USD is going to drop, and it is qouted at 1.1859 (as it is right now). I also believe that I need to give it 50 pips of freedom for whipsaws. The challenge is to figure out how MUCH of EUR/USD to short. I am using Aonda, so this value should be expressed in units. I've been looking at this website, and trying to make sense of it: http://www.babypips.com/forex-quicks...-your-pls.html "EUR/USD at an exchange rate of 1.1930 (.0001 / 1.1930) X EUR 100,000 = EUR 8.38 x 1.1930 = $9.99734 rounded up will be $10 per pip" For the EUR/USD right now: (0.0001/1.1859) * (1.1859 * 100000) = $10 This forumla would seem to always produce a pip value of $10 for pairs using the USD as the "qoute" price. Is that correct? Knowing that my stop should be at a $20 loss, and a pip is worth $10, then it would seem I could only set my stops at 2 points instead of 50. Then again, its 4am, lol. Any suggestions?