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

[MickMason]

Originally Posted by kenazen

I'm trying to figure out how many units to buy, and I have been under the assumption that leverage would somehow effect how many untis I could buy.

Haven't we already done this bit, I'm getting a definite feeling of deja vu

[kenazen]

Originally Posted by MickMason

Haven't we already done this bit, I'm getting a definite feeling of deja vu

Well, you did say to "forget about margin and leverage".

The book "Getting Started in Currencies" unfortuneately starts off saying "all these examples assume 1:1 leverage". So that wasn't any help.

My test trades haven't hit their stop losses yet, so I havent been able to use those either.

Apparently nobody is using a formula to determine how many units to buy, which means they are either giving up control of their Stop Loss or their bet-size. Not just here, but also on the Aonda forums. Everyone says its so simple, yet no one can produce a formula to express it.

I understand if you feel like this thread is not going anywhere but circles and are tired of it, but I've got to figure this out, and I will figure it out. When I have it figured it out, I'll post it. Not understanding is not one of my options.

I do appreciate the time you've spent trying to help me.

[kenazen]

My 3rd attempt at determining the number of units to buy involves only 2 cases, when the USD is the Qoute pair, and when it is not:

x/USD:

Units = ((RiskAmt/MaxPipLoss) / .0001

All Others:

Units = ((RiskAmt/MaxPipLoss) * USDRATE) / .0001
or
Units = ((RiskAmt/MaxPipLoss) * USDRATE) / .01

[MickMason]

Originally Posted by kenazen

Apparently nobody is using a formula to determine how many units to buy....

I guess for most people a mathematical formula isn't necessary as it's something which can be worked out in seconds, on the fly.

What is it you're basically trying to do, write a backtesting script?


Mick

[Paulolion]

Originally Posted by kenazen

"Several people have suggested using the online tools, but I would like to be able to use these valuations in automated backtesting, so I need to understand how to compute them by hand (so I can write the backtesting program)."

thanks!

I replied to one of your first messages, i only saw that after. Anyway, i tought you would only want to know the value, and not how to calculate. Also when you referred to online tools i didn´t knew if it was O*anda´s or others.

Sorry about that.

[kenazen]

Originally Posted by MickMason

I guess for most people a mathematical formula isn't necessary as it's something which can be worked out in seconds, on the fly.

What is it you're basically trying to do, write a backtesting script?


Mick

Yes, I plan to backtest various strategies, so I need to be able to compute everything. It's also useful for recording why I did certain things.

[ampris2000]

oh! I think I see what you're trying to do.

i'll work on it over the weekend.

it's the same thing that I have already done except mine is expressed in dollars and pip values. You want it to show units.
Same thing, different output.

sorry everyone who used the spreadsheet, i think oan''da is the only one that lets you choose units. I think the others you have to buy lots. My spreadsheet is set up so a person can buy units .

there should be a formula somewhere online that shows you how to compute this.

later.

by the way, on co-related pairs you should divide the pip value amongst that so it's still a 1% loss. I had like a 5% to 10% loss this week cuz I didn't do that. I had each pair be a 1% loss.
The money mana. strat I use says if you're trading co-related pairs to split the pip value on those pairs so if all your stops were hit, it would still be a 1% loss.
I had not quite paid much attention to that, but from now on I will! Especially since I am going to be trading for other people.

my MM method.
http://www.fxstreet.com/nou/content/107410/content.asp

[ampris2000]

I'm basically trying to create my own version of what Ampris2000 is doing. I'm not sure if he worked out certain things, or stumbled upon them, but there are several things he is doing that I think are requirements for a successful methodology. The primary being, you have to make a lot of little bets instead of a few big bets. He doesn't (formally) account for volatility or correlated pairs, but as a little guy, he/we probably don't have to.

1. you need to have a good strategy for starters.

2. You can make big trades or little trades, I do both. The thing is not to risk more than 1% - 3% (your choice) (or less than 1%) of your account balance. That's the little area in my spreadsheet that says desired pip value. Then it will tell me where to set my s/l.
sometimes i've made big bets with a tight stop and it wasn't hit, sometimes they are hit before they continue on in the "winning" direction. Either way, I've already been down the street not having a MM plan and it's not fun. You'll blow out your account rather quickly.

3. it doesn't matter if you're a little guy or big guy. Whether you trade $100 or $100,000 dollars.
Why? Because a 1% loss is a 1% loss. A 10% gain is a 10% gain.
That's part of trading psychology to say oh well, I lost $1.00. Then why say on the 100,000- oh no! I lost $1000.00!
It's still the same thing, 1%.

a good quote to learn:
"Forget about the money. Focus on being a good trader and the money will follow."