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Money Management Calculator

  • #1
  • First Post: May 21, 2007 12:21am May 21, 2007 12:21am
Hello all,

I am new to trading but I have put many hours into reading this forum and the advise of the professionals. The first and most stressed advise given by any of the professionals is Money Management.

There is a particular thread by Diallist that goes over the calculation for how many blocks you should buy given a specific account risk. I do not find these calculations to be hard by any means, but I can see where new people shortcut this step. Therefor, I have made a simple but useful calculator for myself and my wife (I do not trust her to calculate risk assessment ). If there are any errors in this calculator, please tell me and I will fix it.

So if anyone else would like to use it, I have attached it to this post. I made it in excel, and anyone without excel can download OpenOffice (A free Office clone from Sun Microsystems).

Also, It would be cool to have a Forum dedicated to forex tools. Calculators, MT4 Templates, MT4 EA's, etc...

Thanks for the great forum, I am learning a ton. Trading a demo account at the moment, but hope to start a mini account soon.

Que
Attached File(s)
File Type: zip Money Management Calculator.zip   8 KB | 12,669 downloads
Que
  • #2
  • May 21, 2007 12:44am May 21, 2007 12:44am
Attached is the zip file with both the excel and the open office version for those who are interested.
Attached File(s)
File Type: zip Money Management Calculator.zip   25 KB | 7,488 downloads
Que
  • #3
  • May 21, 2007 1:17am May 21, 2007 1:17am
Quoting Que
Attached is the zip file with both the excel and the open office version for those who are interested.
Thank you. I am interested. And open office rules! Whoo!!
  • #4
  • May 21, 2007 3:03am May 21, 2007 3:03am
Quoting Que
Hello all,

I am new to trading but I have put many hours into reading this forum and the advise of the professionals. The first and most stressed advise given by any of the professionals is Money Management.

There is a particular thread by Diallist that goes over the calculation for how many blocks you should buy given a specific account risk. I do not find these calculations to be hard by any means, but I can see where new people shortcut this step. Therefor, I have made a simple but useful calculator for myself and my wife (I do not trust her to calculate risk assessment ). If there are any errors in this calculator, please tell me and I will fix it.

So if anyone else would like to use it, I have attached it to this post. I made it in excel, and anyone without excel can download OpenOffice (A free Office clone from Sun Microsystems).

Also, It would be cool to have a Forum dedicated to forex tools. Calculators, MT4 Templates, MT4 EA's, etc...

Thanks for the great forum, I am learning a ton. Trading a demo account at the moment, but hope to start a mini account soon.

Que
then you may have missed his advice to start with a micro account first.
The advantages are that you can trade smaller lots more precisely, and, therefore, use 1% account risk on trades more easily.
I'm sure your spreadsheet will be appreciated and welcome to FF
  • #5
  • May 21, 2007 3:28am May 21, 2007 3:28am
Thanks Que!!
  • #6
  • May 21, 2007 3:59am May 21, 2007 3:59am
Quoting PeterFM
then you may have missed his advice to start with a micro account first.
The advantages are that you can trade smaller lots more precisely, and, therefore, use 1% account risk on trades more easily.
I'm sure your spreadsheet will be appreciated and welcome to FF


I will be opening a Mini account with Interbank FX. With Interbank FX your options are Standard and Mini. With a Mini account you are able to buy 0.10 lots ($1000 lots). That is equivalent to a Micro account.

I had a lot more typed as I took your thread as very negative as well as blatantly questioning my intelligence and reading comprehension skills. For the sake of argument, I will assume I am just reading your reply incorrectly.

If you look at the spreadsheet, I believe the last value is $300 account balance. This is what we plan on starting with for a variety of reasons. My wife and I will each open an account and see if this is for us. Using proper money management (2% per trade), proper stops, and following a system we have been demoing for a while now; a $600 investment to see if this is for one or both of us is worth it.

With the demo account on Interbank FX using the exact numbers as above, we were averaging about 500 pips per month using one of the simple MA systems on this board. I understand fully that demo trading and live trading are different, but we are hoping for 250 pips on average a month. This may be overly optimistic, but you need a goal.

Given that goal, the plan is the following.

-Deposit $300 in each account.

-Reset risk assessment each week (If at the start of the week there is $300 in the account, then 2% risk is $6 a trade. We buy 2 lots (0.10) each trade that week win or lose. At the beginning of week 2 we reassess our account balance and adjust accordingly. The reason for this is we do not plan on day trading the account. From our limited experience, no more then 10 trade per week will be made. Even if all 10 hit there stop, we are only down 20%. I am not sure how this sounds to the professionals, but sounds quite reasonable and effective to me.

-Each month deposit $300 into the account.

If the goal of 250 pips per month succeed (20% increase in capital with a 2% risk), we will have deposited $3600 into each account. Each account would be worth approximately $14,250.

My concerns are.

-Is 2% account risk to much, or should I be at 1%? The first few trades would have a 6.67:1 leverage using 2% and I was told to keep it under 5:1.

-Is 250 pips a reasonable expectation? I know people on this forum get upset when you talk about counting pips. But in my case I know the exact percent of growth that represents as my risk per trade is static 2%.


Que
Que
  • #7
  • May 21, 2007 4:11am May 21, 2007 4:11am
Quoting Que
I had a lot more typed as I took your thread as very negative as well as blatantly questioning my intelligence and reading comprehension skills. For the sake of argument, I will assume I am just reading your reply incorrectly.
Assumption correct. Those that know me better will know that negativity is not part of my arsenal. I normally respond to new members in a spirit of help and encouragement. So we'll leave it there.
Quote
My concerns are.
-Is 2% account risk to much, or should I be at 1%? The first few trades would have a 6.67:1 leverage using 2% and I was told to keep it under 5:1.
Yes, 2% is too much, that was the point of my reply to your first post.
Quote
-Is 250 pips a reasonable expectation? I know people on this forum get upset when you talk about counting pips. But in my case I know the exact percent of growth that represents as my risk per trade is static 2%.
Que
If your testing of the method has lead you to believe this then why not? You've obviously put a lot of thought into this plan, and I wish you well.
  • #8
  • Edited 4:30pm May 25, 2007 3:12pm | Edited 4:30pm
cool... I've got a question. How have you calculated the pip values?

Tell me where I'm counting wrong, as that's how I do it:
say I want a standard pip value for USD/CAD. atm USD/CAD is 1.0790, so 1 pip is 10 CAD here, that is 9,2678 USD. Correct? Or I'm completely wrong?
In your excel you've used $6,25 as a pip value for USD/CAD... where is that number from?
  • #9
  • May 26, 2007 2:41am May 26, 2007 2:41am
The pip values are not correct for all pairs. I forgot to mention that.

This is the reason I gave a table in the Data sheet. All you have to do is place the correct values in column B and it will update columns C and D automatically. As most of the pairs have vairiable pip values this was the intent.

I will update the calculator with the most recient pip values and repost the calculator.
Que
  • #10
  • May 26, 2007 3:41am May 26, 2007 3:41am
Quoting PeterFM
Assumption correct. Those that know me better will know that negativity is not part of my arsenal. I normally respond to new members in a spirit of help and encouragement. So we'll leave it there.
Yes, 2% is too much, that was the point of my reply to your first post.
If your testing of the method has lead you to believe this then why not? You've obviously put a lot of thought into this plan, and I wish you well.
2% is too much but with a starting equity of 300$ and using .1 lot it would be difficult to trade with lower rik thean that
  • #11
  • May 26, 2007 4:12am May 26, 2007 4:12am
In order to get the correct pip values, all you have to do is go to the Data sheet and place the current Exchange rate in column E. The calculator will automaticaly give you the pip value in USD. The values are pretty mush up to date as of this posting.

So this calculator is also a pip value calculator on the Data Sheet.
Attached File(s)
File Type: zip Money Management Calculator 3.zip   26 KB | 2,807 downloads
Que
  • #12
  • May 26, 2007 4:16am May 26, 2007 4:16am
I can move it down to 1% risk and trade one $1000 lot with a 30 pip stop. I do not think that is unreasonable. it would also give me a 3.33:1 true leverage on the EURUSD market.

I guess that is what I will be doing as a few people have addressed a concern over the choice of 2%. 1% seems to fit all of the professionals recomendations as far as % of capital risk and amount of true leverage.
Que
  • #13
  • May 26, 2007 5:58am May 26, 2007 5:58am
Can you have this auto update with meta trader DDE server
I have a few excel sheets that do this , i will try to find and maybe you can copy and paste some code macro in excel




Quoting Que
In order to get the correct pip values, all you have to do is go to the Data sheet and place the current Exchange rate in column E. The calculator will automaticaly give you the pip value in USD. The values are pretty mush up to date as of this posting.

So this calculator is also a pip value calculator on the Data Sheet.
  • #14
  • May 26, 2007 7:07pm May 26, 2007 7:07pm
Ok this version is only for Excel.

I noticed in Excel some of the lists were not correct, these have been fixed. Also to have the DDE autoupdate, you must be running Excel not the open office version.

Go to the Data Sheet and select either Manual or Meta Trader on the update type. If you select Meta Trader, you must have MT4 open and DDE enabled. This will auto update your table. Otherwise you must select Manual and manually input the data into the fields in yellow.
Attached File(s)
File Type: zip Money Management Calculator 4.zip   8 KB | 2,131 downloads
Que
  • #15
  • May 31, 2007 12:55am May 31, 2007 12:55am
Attached is the newest release of the calculator.

Now the true lot value, position value and ture leverage are calculated into USD instead of a static 100,000. This gives the most accurate leverage in USD.
Que
  • #16
  • May 31, 2007 12:56am May 31, 2007 12:56am
Forgot to attach...
Attached File(s)
File Type: zip Money Management Calculator 5.zip   8 KB | 3,786 downloads
Que
  • #17
  • Jun 22, 2007 6:29pm Jun 22, 2007 6:29pm


Three thumbs up for this one Que!!!!!

For those who aren't using this or something like it, do so if you truly wish to succeed at this!! & DO NOT exceed 2-3% risk maximum (preferably 1-2%)!

YOU CANNOT SUCCEED AT THIS LONG-TERM WITHOUT PROPER MONEY MANAGEMENT!!

D.
  • #18
  • Jun 25, 2007 10:25am Jun 25, 2007 10:25am
Thanks a ton , For some reason I can not get it to talk to my MT4 but it is a Great little worksheet..

I selected MetaTrader for update method and have MT running & checked the DDE box. Will it work with a Demo account??
  • #19
  • Jun 25, 2007 11:42pm Jun 25, 2007 11:42pm
If it is a mini account, you must change column F on the data sheet to add a m at the end.

example:

Change

=MT4|ASK!USDJPY

To

=MT4|ASK!USDJPYm
Que
  • #20
  • Jul 9, 2007 8:05am Jul 9, 2007 8:05am
Thanks Que, works like a charm now.
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