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Risk Management together with Leverage and Lot size
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Aug 30, 2020 at 21:04
Miembro desde Jun 14, 2020
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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.
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.
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Sep 18, 2020 at 08:54
Miembro desde Feb 22, 2011
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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?
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Oct 07, 2020 at 04:59
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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
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