Attachments: Position sizing calculator

Position sizing calculator

#1
First Post: Dec 8, 2013 5:37pm Dec 8, 2013 5:37pm

SeanyTsunami
| Joined Apr 2013 | Status: J16. | 101 Posts

Position Sizing, otherwise known as risk management is an essential part of a trading plan. Without consistent risk management, there will not be
consistent results.

Just thought I would post a simple way to calculate your position size for Equities and Forex.

Equities: (Risk in $/stop size in in $) = Amount of shares to transact

Forex: (Risk in $/stop size in pips/9.85) = Lot size

Example:

Equities: Stock XYZ is at 60$ per share stop is 9$ away from your entry. Risk tolerance is $2000 per trade.

(2000/9) = 222 Shares.

Forex:

(100,000x2%)/67/9.85 = 3.00

#2
Dec 8, 2013 10:47pm Dec 8, 2013 10:47pm

Pipomagic
Joined May 2013 | Status: Coder, Trader & Optimist | 209 Posts

On behalf f newbies, i thank you

DON'T TRADE THE DIRECTION, TRADE THE MOVE

#3
Dec 8, 2013 11:06pm Dec 8, 2013 11:06pm

PoundTrader
Joined Sep 2010 | Status: Life Time Member | 6,685 Posts

http://www.babypips.com/tools/forex-...sitionsize.php

#4
Dec 8, 2013 11:31pm Dec 8, 2013 11:31pm

4tiger
| Joined Mar 2012 | Status: Trader | 429 Posts

Quoting SeanyTsunami

Disliked

Position Sizing, otherwise known as risk management is an essential part of a trading plan. Without consistent risk management, there will not be consistent results. Just thought I would post a simple way to calculate your position size for Equities and Forex. Equities: (Risk in $/stop size in in $) = Amount of shares to transact Forex: (Risk in $/stop size in pips/9.85) = Lot size Example: Equities: Stock XYZ is at 60$ per share stop is 9$ away from your entry. Risk tolerance is $2000 per trade. (2000/9) = 222 Shares. Forex: (100,000x2%)/67/9.85...

Ignored

simple way is simple enough.. but not all the way there..

let's have a look at your equation again
(100,000x2%)/67/9.85 = 3.00

what is 9.85?

here:
risk in $ / stop size in pips = dollars you are willing to lose per pip
so
2000 / 67 = 29.85 bucks you are willing to lose per pip.

29.85 is not 3 lots across the board for each currency pair!

on the EURUSD or any XXXUSD pair, a lot is 10 bucks a pip, so yes, 3 lots = 30 bucks (about 29.85)

but it's different on each USDXXX pairs.

again.. what is 9.85?

#5
Dec 9, 2013 9:21am Dec 9, 2013 9:21am

SeanyTsunami
| Joined Apr 2013 | Status: J16. | 101 Posts

9.85 is the value per pip. For a standard 1.00 lot. I was just trying to figure out an easy equation that works, and I am open to suggestions.
Of course, there is a couple good position size calculators for free on the web. I just thought it would be good to try and figure out a way to
calculate position size without the use of one of those calculators. Although, those do work great.

#6
Dec 9, 2013 9:22am Dec 9, 2013 9:22am