Risk Management together with Leverage and Lot size

Aug 12, 2020 at 20:34
1,662 Views
28 Replies
Member Since Jun 14, 2020   2 posts
Aug 12, 2020 at 20:34
How to effectively calculate Risk and Reward. formula to use as well as tips to make it easy to understand.
Member Since Apr 15, 2020   83 posts
Aug 14, 2020 at 08:33
It is necessary to work out and calculate very carefully, and preferably several times.
Member Since Jul 19, 2020   318 posts
Aug 28, 2020 at 16:48
It is very much needed to make a proper plan to minimize the risks and try to make profit from this market. When you are going to make a strategy, you should keep in mind about the market situation.
Member Since Jun 14, 2020   2 posts
Aug 30, 2020 at 21:04
I need some help, indeed.

understand that each trade consist namely of,
SL; R:R; and proper lot sizing, however I get confused with the part of margin & Leverage.

Using a local broker called Globex360 (SouthAfrica) and using a 1:100 account

I jusst need to understand how to do the calculations and which figures to use where.

Haven't even looked at any tools apart from support and resistance maybe some wick readings on various timeframes, still learning truly am enjoying it but need to understand it all abit better.


Member Since Jun 24, 2020   34 posts
Aug 31, 2020 at 07:27
Dorigda posted:
It is necessary to work out and calculate very carefully, and preferably several times.

Can't agree more with you.
Member Since Jul 19, 2020   34 posts
Aug 31, 2020 at 10:58
If you want to make a good career in this market, you have to make a proper strategy. You need to know how to manage the risks. a proper plan can make you rich in this risky platform.
Member Since Jun 03, 2020   30 posts
Sep 07, 2020 at 06:11
Well, I don’t think that you need to do that manually because most brokers have calculators on their online platforms offering you to calculate risk and reward.
Member Since May 13, 2020   128 posts
Sep 18, 2020 at 07:26
Failure to manage your risks and capital will lead you to rash mistakes and loss.
Member Since Feb 22, 2011   4862 posts
Sep 18, 2020 at 08:54
MarvinKops posted:
How to effectively calculate Risk and Reward. formula to use as well as tips to make it easy to understand.

It is quite easy. Lets say you want to risk 1% per each trade.
So you need to calculate value of 1 pip and set your TP and SL accordingly. P.S. if there is a gap over weekend your SL,TP wont be executed.
So the calculation. My favourite pair EUR USD. Account balance $100,000. 1% is $1,000.
The simplest example:
Buy 1 lot of eur usd at the rate 1.18000.
It does actually mean you spent $118,000 USD to buy 100,000 EUR.
So if the rate move to 1.19000 then value of position is $119,000 USD. You made $1,000 profit (minus spread, commison and sllipage)
So if the rate move to 1.17000 then value of position is $117,000 USD. You made $1,000 loss (plus spread, commison and sllipage)
So your SL and TP are 1.17000 and 1.19000 = 1,000 pips (pipetes actually)

Wanna more examples?
Member Since Jul 20, 2020   232 posts
Sep 21, 2020 at 19:42
If you want to become successful in this market you need to deal properly with the risks. Proper risk management can ensure you a good amount of profit.
Member Since Mar 16, 2020   54 posts
Sep 22, 2020 at 05:24
One needs to have a proper risk management to avoid the losses. In trading if you want to have profits then you should know how evaluate the risk.
Member Since Sep 07, 2020   63 posts
Sep 22, 2020 at 05:55
It can be very useful if you can work out your trading and find the appropriate calculation on such trading lot, size, and many other.
You will need to do it more than once for accurate result.
Member Since Oct 07, 2020   104 posts
Oct 07, 2020 at 04:59
MarvinKops posted:
How to effectively calculate Risk and Reward. formula to use as well as tips to make it easy to understand.

leverage and lot size goes hand in hand
higher the leverage lower will be you margin required
it means you are dealing in a 1 lot of eur/usd with 30x leverage you will only be needing
Leverage is what a trader borrows from the broker. In margin trading, you basically invest a portion of the amount you’re trading and the rest you borrow from the broker.
If your leverage ratio is 30:1, it means that with one unit of a currency you can hold 300. So 1 USD will be able to hold 30 USD. So your 30 dollars will only be used and rest is borrowed from the broker
The advantage of this is that you will be able to place trades on higher lots and earn big profits and moreover if you’re just a beginner in the trading world this might help avert any kind of major loss so to keep losses in check we opt for higher leverages Trading on a standard lot of usd requires 100,000 usd which is not possible so to make it possible leverage comes in to play
Most common lot sizes are
Standard 100000
Mini 10000
Micro 1000
Working on higher lots also increases the risk of greater profits if you are just a beginner you must try to trade on micro or mini lots
Member Since Jul 23, 2020   869 posts
Jul 07, 2021 at 08:32
If you are using high leverage or want to use high leverage you must have a proper risk management plan in place.

Member Since May 13, 2021   12 posts
Jul 12, 2021 at 04:23
It seems to me that regardless of the fact that you will use leverage or not, you still need to be able to manage risks, this gives you some security
Member Since Jul 19, 2020   788 posts
Jul 12, 2021 at 16:34
From my experience, risk ratio and leverage are very important in trading. These factors help maintain discipline in trading as well as provide account security.
Member Since Mar 17, 2021   536 posts
Jul 13, 2021 at 10:22
LyudmilLukanov posted:
If you are using high leverage or want to use high leverage you must have a proper risk management plan in place.

Yes. absolutely right.
Member Since Jun 12, 2021   132 posts
Jul 24, 2021 at 06:32
if you think only high leverage ratio can bring good amount of profit then it could be dangerous in spite of having good risk management. so be careful when trading.
Member Since Aug 09, 2017   785 posts
Jul 26, 2021 at 07:22
actually there is nothing 100% in Forex trading for that reason any kind of risk management works to fail most of the time.
Member Since Jul 07, 2021   41 posts
Jul 26, 2021 at 12:24
Risk management is very important. And it is not only about using a formula. You need to devote time and keen analysis to establish what is really going on and be able to make a good prediction.
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