How do I calculate size of position to open if I know how much money I want to risk?

[ycomp]

Confused about moneny management.... I know this is quite basic, but please someone help me out...

- starting balance = $10,000
- If I know I want to risk 2% of my $10,000 on any position then that means I am risking $200 on any trade.
- My stop losses are always set at 70 pips
- So I want each pip to be worth $200/70 = $2.86

from this information, how can I calculate:

- how much of my $10,000 I would need to use to open the position?
- what leverage to use?

thanks... I've been scratching my head trying to figure this one out... if I'm missing any variables then please just insert them with an example value.

michael.

 

[Anonymous]

If the contract is say, EUR/US$, eg. current quote: 1.2070

If each pip = US$2.86 then contract size = 28600 units

If leverage is 50:1 ie. 2%
then at 28600 EUR/US$
= 28600 x 1.2070 x 2% = US$690.40 margin.

 

[moe]

Confused about moneny management.... I know this is quite basic, but please someone help me out...

- starting balance = $10,000
- If I know I want to risk 2% of my $10,000 on any position then that means I am risking $200 on any trade.
- My stop losses are always set at 70 pips
- So I want each pip to be worth $200/70 = $2.86

from this information, how can I calculate:

- how much of my $10,000 I would need to use to open the position?
- what leverage to use?

thanks... I've been scratching my head trying to figure this one out... if I'm missing any variables then please just insert them with an example value.

michael.

Try this. tradestars.com