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what is the safe/optimal pip sizing?

  • Post #1
  • Quote
  • First Post: Oct 12, 2007 6:03pm Oct 12, 2007 6:03pm
what is better lot sizing ? basically if one just enter on fully confirmed long term trends with sensible trailing stop or stop loss. seldomly trading....maybe no more than ~24 times a year or ~twice a month. this would be locating long trends based on fundamentals as well as technicals.

intial deposit: $10000.

$10000 / 100 pips. means im willing to take threshold of 100 pip. $100/pip....risky ?

$10000/1000 pips. means im willing to take threshold of 1000 pip. $10/pip.
i'd say this is still okay.

$10000/10000 pips. means threshold of 10,000 pips. $1/pip.

$10000/10 pips....means suicide.... i have a threshold of 10 pips before account is gone. but $1000/pip.


lets assume we willl use NDD....what about for DD brokers ?
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  • Post #2
  • Quote
  • Edited 7:07pm Oct 12, 2007 6:56pm | Edited 7:07pm
A better calculation is by figuring how much you would like to risk of your total account size on a single trade.

For example:

$10,000
Risk per trade %: 2.0%
Risk per trade $: 10,000 * 0.02 = 200

Currency Pair: EUR/USD [ For math sake since 1 pip per 1 lot = $10 ]
Stop Size: 100pips
Stop Size * Pip Value ($10) = 1000
Risk per trade $ / Stop Size * Pip Value ( $10) = 0.2

Lots to trade = 0.2 [ 2 Mini lots ]

For more information this post is great: http://www.forexfactory.com/showpost...3&postcount=18
Quoting tango112
A better calculation is by figuring how much you would like to risk of your total account size on a single trade.

For example:

$10,000
Risk per trade %: 2.0%
Risk per trade $: 10,000 * 0.02 = 200

Currency Pair: EUR/USD [ For math sake since 1 pip per 1 lot = $10 ]
Stop Size: 100pips
Stop Size * Pip Value ($10) = 1000
Risk per trade $ / Stop Size * Pip Value ( $10) = 0.2

Lots to trade = 0.2 [ 2 Mini lots ]

For more information this post is great: http://www.forexfactory.com/showpost...3&postcount=18
Does this simple math works for his Trading System or your Trading System??
basically i will be placing one entry per month...
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Vinnie99,

This math is not trading system specific. This is a position sizing calculation and has nothing to do with a trading system.

To figure out your ideal risk rate you would have to do some Monte Carlo simulations and statistical analysis of your trading system and its expectancy which is a completely different subject.
jjk2,

How much of your account do you want to risk on this one entry per month?
  • Post #7
  • Quote
  • Edited 8:07pm Oct 12, 2007 8:05pm | Edited 8:07pm
I would buy incrementally right now in the USD/JPY. Perhaps buy .2 lots, then when you have support above your .2 lots, say above the 50% fibo level then add .3 or another .2 lots. Don't liquidate your positions just wait until support developes above your positions. Keep adding comfortable, non-fearful positional sizes to a certain currency pair and before you know it you'll have a full standard lot invested. Also, use carefull money management by hedging against loss. Perhaps you could put a hedge sell stop below your supports that you used for incremental buying. By taking half of your profits of the table you will feel more comfortable with any capricious losses that may occur. You can always liquidate your hedge later. The most important aspect of trading any market, in my opinion, is the ability to have an important basis (starting level) that is in profit. Fear is a killer.
Quoting tango112
jjk2,

How much of your account do you want to risk on this one entry per month?
10~25%. lets be clear tho. should the stop loss trigger, i will lose around there.
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Quoting michael7
I would buy incrementally right now in the USD/JPY. Perhaps buy .2 lots, then when you have support above your .2 lots, say above the 50% fibo level then add .3 or another .2 lots. Don't liquidate your positions just wait until support developes above your positions. Keep adding comfortable, non-fearful positional sizes to a certain currency pair and before you know it you'll have a full standard lot invested. Also, use carefull money management by hedging against loss. Perhaps you could put a hedge sell stop below your supports that you used for incremental buying. By taking half of your profits of the table you will feel more comfortable with any capricious losses that may occur. You can always liquidate your hedge later. The most important aspect of trading any market, in my opinion, is the ability to have an important basis (starting level) that is in profit. Fear is a killer.
ii agree. ideally i will be locked into the trade (provided its profitable) and i adding small positions would work out fine. but then again i have to monitor even more actively.

MBTrading dont allow hedging.....so Oanda im stuck with.


btw, i just want to know if what im doing is viable. holding on to long trends.
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  • Post #10
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  • Last Post: Oct 13, 2007 7:15am Oct 13, 2007 7:15am
Quoting tango112
Vinnie99,

This math is not trading system specific. This is a position sizing calculation and has nothing to do with a trading system.

To figure out your ideal risk rate you would have to do some Monte Carlo and statistical analysis of your trading system and its expectancy which is a completely different subject.
LOL,

No it is not!

Sorry bro. No need to advise me. I cant tell you about my own MM and Risk Management.
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