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The simplest question about MM

  • #21
  • Jul 6, 2007 4:47am Jul 6, 2007 4:47am
Quoting Warper
It can be easy to awnser.. how many 1 dolar lots do you invest per every 1 thousand dolars or more.
It depends on the day. If it's an even number day, I invest a shitload per thousand dollars. If it's an odd day, I invest a fxxxload per thousand.

Happy?
  • #22
  • Jul 6, 2007 9:46pm Jul 6, 2007 9:46pm
Quoting Warper
For god sake........................... now i have to erase all of this!

No i dont want help.
No i dont focus my entire trading on this.
No i'm not avoiding nothing.

All i want to know is...

Lots/Equity

Which will give us...1 pip = xxxx%

Leverage... 10:1 pip = 0.1%
5:1 pip = 0.05%

Just this! Curiosity if you want to call it!

Im not seeking for the holy grail here.

Can you awnser this? Jeez

Hope the following will help you..

The PIP is a forex jargon.

It’s best explained by an example.

Bid Ask
EUR/USD 1.3592 1.3594

The difference between Bid and Ask is 4-2 = 2 pips.

For EUR/USD , as far as Bidder is concerned, 1 pip is equivalent to 0.0001/1.3592 = .00007357 = .007357 % of the Bid price

As a trader, money you make on 1 pip depends very much on your margin gearing.

Example: If you use 1 USD to buy 40 USD worth of another currency, your gearing is 40.

The profit or loss is magnified by a factor of 40.

The profit/loss of 1 pip difference in our EUR/USD example becomes 0.00007357 x 40 = 0.2943 % approx. of the Bid price (or purchase price)


It appears to me that you are very interested in forex trading.

Welcome aboard, pal !

2007.06.07.07
  • #23
  • Edited 10:08pm Jul 6, 2007 10:04pm | Edited 10:08pm
  •  MikeG
  • | Joined Aug 2005 | Status: Empowered to Profit by James16.com | 59 Posts
Quoting Warper
For god sake........................... now i have to erase all of this!

No i dont want help.
No i dont focus my entire trading on this.
No i'm not avoiding nothing.

All i want to know is...

Lots/Equity

Which will give us...1 pip = xxxx%

Leverage... 10:1 pip = 0.1%
5:1 pip = 0.05%

Just this! Curiosity if you want to call it!

Im not seeking for the holy grail here.

Can you awnser this? Jeez
Hi,

Not quite sure what you're hung up on here, but let me ask you something.

Have you even bothered to read Diallist's Money Management sticky thread at the top of the Forex Beginner's Q&A forum? (Psst, it's the forum you're in now.)

If you haven't given yourself that gift, I suggest you go do so now, and be sure to read every post Dial makes until you fully understand the relationship between account, stop, leverage, % risk, etc.

Have fun sweetie!!

Michele UU <- Got a nice tan today!
I am an extremely satisfied customer of the James16 Group!!!
  • #24
  • Jul 7, 2007 1:19am Jul 7, 2007 1:19am
lolol michele your edit reason has not gone unnoticed
  • #25
  • Jul 7, 2007 7:54pm Jul 7, 2007 7:54pm
MikeG and gbl... i'm sorry but that was not the awnser i was looking for.

The only reason this thread ended up here is due to poor reading skills by the admin staff.

I will not even bother to make the entire question again because it will be the 4th time i do it in this thread, including the erasing of the original topic.

I just asked like a an extended poll, like a curiosity to know what is the actual status of opinion (between pseudo-experts) about leverage, but instead of asking for anwers like 2:1 20:1 50:1, i asked in terms of equity percentage per pip. I mean if we have 1000 dollars and we use one 10k lot at max... a pip would be 0.1% of the equity. 1 dolar pip per every 1000 we have.

I have a well defined strategy. I dont need to know what to do. The only reason was started this thread is to understand the ultimate paranoia around money management.

Everybody knows that MM its important but some ppl took it to a crazy point so far, that am seeing ppl who is starting to use no leverage at all with mini accounts. Or even one guy that i saw, who acomplished the incredible fact of gaining below 1:1. His pips were equal to 0.00625% or in other words the guy would have to loose 16000 pips in a row to lose it all. Is that even possible?

Well. My sugestion is to forget about this thread and let it go. I see that my point was not made and i quit. Some ppl gave good awnsers, but i can't fight against the ones, who think that its even possible to live from forex, having a gain of 0.00625% per pip. 16 Thousand pips to finaly double the equity. How many years ? half decade?

Whatever!
  • #26
  • Jul 8, 2007 6:09pm Jul 8, 2007 6:09pm
Quote
luqmanz thanks! (i hope you dont mind with your quote in my signature, your nick is there. "author rights") You have the same leverage and trading style than me. I might ask you more about your strategy if you have the time.

No problem. Good trading to you.
  • #27
  • Jul 9, 2007 12:07am Jul 9, 2007 12:07am
Risk Management starts with working out the PROBABILITY of winning(or losing) a forex bet…. RISK#1

The gearing or leverage will magnify the amount that you win/lose on that particular bet…. Winning more or losing more….. RISK#2 (this is why many people are saying that taking a forex bet with high leverage/gearing is very RISKY !)

Mistake that you made on RISK#1 will ensure you losing money.
RISK#2 will ensure you losing a lot of money if you make a mistake on RISK#1

1000 dollar bet ( “equity” as termed by your professor) on a 10K (10,000 dollar) contract will have a leverage of 10.

Since you are such a good mathematician, it should be easy for you to work out in terms of percentage of your “equity” on winning or losing 1 PIP.

Very few real world traders will care to convert their “equity” from dollars to PIP units.

As I have mentioned before, PIP value as a percentage of “equity” varies with currency pairs.

You are exceedingly innovative using the pip as units for your “equity” as other traders find them rather inconvenient as it varies with currency pairs.

If you want statistical(distribution) answers as to what kind of leverage, pseudo-expert traders are using, you are asking question on the wrong forum. You should check it out will FXCM, E-trade ,…or other forex trading platform operators who know exactly what leverages that their trading clients are using.

One last word, in the real trading world, there are no experts, there are only winners and losers.
  • #28
  • Jul 9, 2007 3:21am Jul 9, 2007 3:21am
Quoting Warper
The only reason was started this thread is to understand the ultimate paranoia around money management.
paranoia is human behaviour isn't it? you better start with understanding that 0.00625%/ pip ppl. then maybe that ppl MM can be understand.

MM is only part of that paranoid mind?
  • #29
  • Jul 9, 2007 5:00am Jul 9, 2007 5:00am
i really dont wanna add anything else, but heck...

i think best word to answer your qn is Expectancy. Different people work and leverage themselves on differering risk levels... so we just have to learn to respect and accept it?
  • #30
  • Sep 10, 2007 7:48pm Sep 10, 2007 7:48pm
Funniest grouping of threads I have read in a long time ...
I have too say though ...if you post a question & the majority of people aren't able to answer the question you want answered(or think you want answered) satisfactorily ...
Even after several edits & reposts /new thread(s) etc...then it may reflect more on your ability too ask the question ...rather than the responders ability too answer.
  • #31
  • Sep 10, 2007 7:55pm Sep 10, 2007 7:55pm
Answer to Life, the Universe, and Everything is 42
In trading, there is no bullshit. You either make money or you don't.
  • #32
  • Last Post: Sep 11, 2007 2:02am Sep 11, 2007 2:02am
Quoting Warper
For god sake........................... now i have to erase all of this!

No i dont want help.
No i dont focus my entire trading on this.
No i'm not avoiding nothing.

All i want to know is...

Lots/Equity

Which will give us...1 pip = xxxx%

Leverage... 10:1 pip = 0.1%
5:1 pip = 0.05%

Just this! Curiosity if you want to call it!

Im not seeking for the holy grail here.

Can you awnser this? Jeez
Hi Warper

Not quite sure what you're asking, but does this help?

Trading xxxUSD (where xxx = any currency) each pip is worth $10 per lot traded.

So, if you have a $1,000 account, and trade 1 lot, each pip = $10 = 1% of the account, regardless of leverage.
If you trade 2 lots, each pip moved = $20 = 2% of your account.
If you trade 3 lots, each pip moved = $30 = 3% of your account.
If you trade 0.5 lots, each pip moved = $5 = 0.5% of your account.
And so on.....

OK, now if your account size is $5,000 and you trade 1 lot, each pip = $10 = 0.2% of your account balance, again regardless of leverage.
If you trade 2 lots, each pip moved = $20 = 0.4% of your account.
If you trade 3 lots, each pip moved = $30 = 0.6% of your account.
If you trade 0.5 lots, each pip moved = $5 = 0.1% of your account.
And so on.....

Hence the formula (for xxxUSD) is:
percent involved in 1 pip move = #lots x $10 / account size x 100%

If the second currency in the pair is not USD, then the amount is not $10 per pip:

  1. For example, for USDCHF it is $10 / 1.1880 = $8.42 per pip (assuming current USDCHF quote is 1.1880)
  2. For example, for USDJPY it is $10 x 100 / 113.59 = $8.80 per pip (assuming current USDJPY quote is 113.59)

[I think I have this right: somebody please correct me if not. Thanks]

So you would plug in the $8.42 or $8.80 (or whatever) instead of the $10 in the original formula.

Beyond this, my post
http://www.forexfactory.com/showthre...95#post1582995
explains the math behind risk and leverage a little further.

David

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