How much to buy w/2% risk of $1k and w/50pip SL?

[MickMason]

Originally Posted by kenazen

My first example was an "easy" nonUSD/USD one. If it is correct, then I will next post a USD/nonUSD example (like USD/JPY). The trickiest would be a nonUSD/nonUSD example, like CHF/JPY. I am assuming the formulas are different for each.

Yeah, give me the easy ones first

Have a look at this link http://www.fxstreet.com/conversor/pip/pip.asp

[kenazen]

A quick question on "pyramiding".

I have read that many "bold" traders pyramid their trades. I'm not sure exactly what they mean, but I may do something similar with stocks.

If I have a winning position, I sell my losers and pile on to my stocks that are doing well. I don't mind buying at "highs" because I am already in with a profit. After several weeks of this "quality consolidation", I may end up with all my money on just 2-3 stocks from an initial 10-15. As these stocks make their run up, I tighten my stops, and usually get out when they peak. Then I repeat that cycle.

If I put 2% on an initial currency trade, and it is profitable, is there anything wrong with adding to that position if it becomes profitable? Looking at the 3/4 hour charts, there are some major trends that occasionaly develop, it would be sad to only have 2% on them.

[MickMason]

Originally Posted by kenazen

A quick question on "pyramiding".

I have read that many "bold" traders pyramid their trades. I'm not sure exactly what they mean, but I may do something similar with stocks.

If I have a winning position, I sell my losers and pile on to my stocks that are doing well. I don't mind buying at "highs" because I am already in with a profit. After several weeks of this "quality consolidation", I may end up with all my money on just 2-3 stocks from an initial 10-15. As these stocks make their run up, I tighten my stops, and usually get out when they peak. Then I repeat that cycle.

If I put 2% on an initial currency trade, and it is profitable, is there anything wrong with adding to that position if it becomes profitable? Looking at the 3/4 hour charts, there are some major trends that occasionaly develop, it would be sad to only have 2% on them.

Adding to positions is fine, just as long as they're winning positions Many traders add to positions on retracements in a trend, and I guess there are some other more complex strategies out there for maximising profit.


Mick

[kenazen]

Originally Posted by ampris2000

i don't know if your broker shows it , but mine shows me the pip value as i am entering the units to trade. so even though you may be doing different pairs, as long as you have the right pip value it doesn't matter

I use Aonda. When I click the "Market Sell", the pip value is always "1 Pip = 0.00 USD". I feel like I'm not grasping this stuff.

[kenazen]

Originally Posted by MickMason

Strewth, that's a lot of numbers!

Risking $40 with a stop of 30pips means a trade of 13k ($40 divided by 30pips = $1.33 per pip)


Mick

Isn't that formula too simple? Where is leverage accounted for? Where am I wrong in my steps?

I am preparing my USD/JPY example, but it is based on the one you said was wrong. So I need to understand where I went wrong.

[kenazen]

Here are some examples where I am trying to figure out how much of something to buy if I am willing to risk 2% with a 30 pip stop loss. There are 4 scenarios to determine the amount in USD. I dont really understand what I've done here, but I got some formulas out of "Getting Started in Currency Trading" by Archer & Bickford. My final numbers, like "13,333" you said is the amount I'm supposed to invest - but my account is supposed to only have $2,000 in it. If I use the 20:1 leverage, then comes out to a (more realistic) $666 like I mentioned. I'm *really* confused now, lol.

A) EUR/USD : USD in Quote
B) USD/JPY : USD in BASE
C) CHF/JPY (USD/JPY) : USD in Conversion Base
D) EUR/GBP (EUR/USD) : USD in Conversion Quote

Account Size: $2,000.00 (USD)
Core Equity: $2,000.00 (USD)
Stop Loss: 30 pips per Unit
Leverage: 20:1
Margin Percent = 100/Leverage = 5% = 0.05
Willing to Lose: 2% of Core Equity

--------------------------------------

A) EUR/USD : USD in Quote

Pair: EUR/USD @ 1.1855

1) USD Profit = Price Change x Units Traded
2) USD Profit / Price Change = Units Traded
3) 40.00 / 0.0030 = 13,333

--------------------------------------

B) USD/JPY : USD in BASE

Pair: USD/JPY @ 116.55

1) USD Profit = Price Change x Units Traded / Exit Price
2) USD Profit / Price Change = Units Traded / Exit Price
3) USD Profit / Price Change x Exit Price = Units Traded
4) 40.00 / 0.30 x 116.55 = 15,540

--------------------------------------

C) CHF/JPY (USD/JPY) : USD in Conversion Base

Pair: CHF/JPY @ 89.15
Pair: USD/JPY @ 116.55

1) USD Profit = Price Change x Units Traded / Rate
2) USD Profit / Price Change = Units Traded / Rate
3) USD Profit / Price Change x Rate = Units Traded
4) 40.00 / 0.30 x 116.55 = 15,540

--------------------------------------

D) EUR/GBP (EUR/USD) : USD in Conversion Quote

Pair: EUR/GBP @ 0.6841
Pair: EUR/USD @ 1.1855

1) USD Profit = Price Change x Units Traded x Rate
2) USD Profit / Price Change = Units Traded x Rate
3) USD Profit / Price Change / Rate = Units Traded
4) 40.00 / 0.0030 / 1.1855 = 11,247

[kenazen]

Originally Posted by ampris2000

download the spreadsheet around the end of this thread
http://www.moneytec.com/forums/showthread.php?t=17895

Ampris, did you make an "Expert indicator" that alerts you to stacked MA's? I'm trying to learn about Metatrader programming now, any hints would be helpful! I already know how to program in C, which seems to be what their language is based on, but I don't know anything about how to get an "alert" to be fired. I see from their examples that they are usually doing Buys and Sells, I just want to be notified that I need to eyeball the chart.

thanks!

[ampris2000]

Originally Posted by kenazen

I use Aonda. When I click the "Market Sell", the pip value is always "1 Pip = 0.00 USD". I feel like I'm not grasping this stuff.

yes. when you start entering units you'll see the pip value change.
it should also show available units.

don't be in a hurry. you'll get it . don't make it more difficult than it is.

if you're on demo, just click around and put in numbers and stuff and see what happens.