Tenapenny
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Hi tennapenny. Thanks for your reply. I have read most of that website and it's been brilliant. I'll explain where I'm struggling and you might be able tell me where I'm going wrong. Probably everywhere!
Hypothetical situation....
I start with £10k account. I want to risk 2%.
First I work out the pip value of the pair I want to trade. So with 10k I'd trade mini lots.
So to work out the amount of risk I would do the calculation:
Amount of pips being risked x pip value per 10k mini lot x quantity of mini lots. To take me me to my maximum risk percentage, so in this case with 10k it would be £200.
Questions...
1.when I go to enter this in metatrader in the volume section of the trade tab how does the above calculation relate what comes up I.e 0.1, 0.2, 0.3 etc? Are they the multiplier of how many lots? I.e 1 mini lot, 2 mini lots, 3 mini lots?
2. Where does the leverage come into play and how do I decide what it is? I don't want to risk more than £200 of my actual money. Everything I read says leverage is double sided and can multiply losses? Where in my risk calculation do I need to consider my leverage?
Hopefully you can give me some guidance. I'm finding putting the theory, into real life trading practice is where I'm lost at the minute. Although all of the above could be wrong for all I know!
On a brighter note I have made 406 pips paper trading in 2 weeks so at least I'm improving on the system side of things.
Any help is much appreciated.
Thanks
Luke
The reply from forexkunta gives you what you need to know and maybe this article will help too http://www.investopedia.com/articles/forex/07/forex_leverage.asp
I see you are in the UK so with a 10k account why don't you spreadbet with IG or one of the other company's. If you need an MT4 platform then http://www.smartlivemarkets.co.uk/Index.aspx may be suitable for you as I believe they are the only one's using MT4 for SB. Also you can trade from as little as 0.10 pence a pip, and try the demo first. Easy to work out your risk as well e.g. 10k account with 2% risk = £200. If your stop is 40 pips away then all it will be is 200 divide by forty so you trade at £5 a pip etc.