Money Management

mjh2222

New member
Mar 31, 2018
8
0
1
#1
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,
 

tomorton

Well-known member
Feb 28, 2002
7,060
916
173
62
Exeter
#2
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.
 
May 28, 2018
10
0
1
#3
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.
 

hatemypips

Active member
Nov 11, 2014
226
2
28
#4
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
 

june_girl7

Active member
Apr 9, 2016
314
4
28
#5
Money Management is the key to trade safe and secure to be profitable and at the same time save your money from loss.
 

NVP

Well-known member
Jun 21, 2004
35,849
1,737
223
west sussex, UK
fxcorrelator.com
#6
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
 

june_girl7

Active member
Apr 9, 2016
314
4
28
#10
Right, one should know that how to manage his money for any trade.
 

hatemypips

Active member
Nov 11, 2014
226
2
28
#11
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 :D