Money Management

This is a discussion on Money Management within the Forex forums, part of the Markets category; Dear all I am using a demo account for now in Forex, and I am now trying to work out ...

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Old Jun 17, 2018, 8:48am   #1
 
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Money Management

Dear all

I am using a demo account for now in Forex, and I am now trying to work out how I am going to proceed with money management and leverage.

I would like to use 0.80% as my bankroll risk, and 1% as my profit target per trade.

My question is if I am looking for that 1% minimum profit target per trade, do I trade on a speficif pip amount per trade? I know how much of my account I want to risk per trade, and which pairs I want to trade, but how do I work how how much of a currency to buy according to my balance and risk/reward targets? I think there is some sort of calculation that I am missing.

So if my balance was $2,500, and I wanted to make 1% of that ($25), and I wanted to risk 0.80%, and GBPUSD was 1.32540 for example, how do I calculate how much to buy and where to set my stop and take profit?

Thank you for any help or information.

Kind regards,
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Old Jun 17, 2018, 10:48am   #2
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You would for example go long on a given market if you see the TA makes it probable that price will rise and unlikely it will fall. The best place to set your stop-loss is the highest price at which the TA now says the two probabilities are reversed, so price is probably going to fall further.

You then count the pips between entry and SL and use this to calculate the size of the position that would give you the maximum loss that you wish to risk, as stated, 0.8% of $2,500. Then check the TA so that you can see the pips that would give you the desired 1% gain are also probable - you might wish to avoid price having to struggle through resistance and the like, it might never make it.
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Old Jun 24, 2018, 2:56pm   #3
 
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The simplest method is just trade with the smallest lot. For example you can trade with only 0.01 lot and set the take profit and stop loss by comparison 1:2.
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Old Jun 28, 2018, 5:34pm   #4
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Originally Posted by mjh2222 View Post
Dear all

I am using a demo account for now in Forex, and I am now trying to work out how I am going to proceed with money management and leverage.

I would like to use 0.80% as my bankroll risk, and 1% as my profit target per trade.

My question is if I am looking for that 1% minimum profit target per trade, do I trade on a speficif pip amount per trade? I know how much of my account I want to risk per trade, and which pairs I want to trade, but how do I work how how much of a currency to buy according to my balance and risk/reward targets? I think there is some sort of calculation that I am missing.

So if my balance was $2,500, and I wanted to make 1% of that ($25), and I wanted to risk 0.80%, and GBPUSD was 1.32540 for example, how do I calculate how much to buy and where to set my stop and take profit?

Thank you for any help or information.

Kind regards,

Well if you have $100 bankroll your profit target is 1 dollar (1%). And when calculated in pips it depends on the lot size, for example for 0.01 lot the target is 10 pips (because 1 pip move in this case will cost you 10 cents).

Money comes first. Then depending on the lot size you calculate the exact value of pips
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Old Jul 2, 2018, 4:09am   #5
Joined Apr 2016
Money Management is the key to trade safe and secure to be profitable and at the same time save your money from loss.
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Old Jul 2, 2018, 9:31am   #6
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hey there

don’t get to hung up about it

if 1% then work out how much this is in your home currency ...say if you are banking in sterling and your cap is £1000 ....then you want to state £10 per trade

then ask yourself what pair you are trading

then find a trade

then work out the stop loss in pips

then work out how much that is decided by your £10 stake

so you now have a vs,use to use ......it doesn’t matter if the pair does not involve sterling .....you have worked out in your own way what the stake must be in sterling terms per pip

then it depends on the broker you are using ....some you can simply use the sterling per pip to convert immediately into the pair and trade

otherwise look for,the base currency in the pair ....like usd in eurusd ....and convert your £ per pip rate into dollars to get the staking correct

so if you have calculated that you can risk £1 per pip on a eurusd trade ...then the final stake in that pair will be the current gbp usd rate ......so 1.30 or whatever the current rate is of gbp usd

sorry i am on vacation and banned by wife from looking at market rates !!

n
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Old Jul 9, 2018, 4:13am   #7
Joined Apr 2016
Taking the risk for your trade is up to you that how you can manage and how you can make a profit from it.
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Old Jul 12, 2018, 12:33pm   #8
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Money Management is the key to trade safe and secure to be profitable and at the same time save your money from loss.
^^^^^^^This
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Old Jul 13, 2018, 1:05pm   #9
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the 1% must be calculated on the base currency you are trading ...thats it
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Old Jul 14, 2018, 4:25am   #10
Joined Apr 2016
Right, one should know that how to manage his money for any trade.
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Old Jul 17, 2018, 10:29pm   #11
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Originally Posted by june_girl7 View Post
Money Management is the key to trade safe and secure to be profitable and at the same time save your money from loss.
What's your MM system consist of? Does it include anything more sophisticated than TP and SL than many pundits there try to knock this simple sense into us
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Old Jul 21, 2018, 4:14am   #12
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Yes, I use TP and SL for my MM system. It is simple but not sophisticated like yours.
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