EURUSD

Que,

Very good post, but email me...about the weekly gains...I'll shatter a myth for you...

When I first started out in the trading game a great old trader once told me something that I have never forgotten to this day. Since then I have heard the phrase repeated many times, however when he said it to me - it really rang home. "The one thing you cannot control is the market - however the one thing you can control is YOU!...true words indeed as I found out the hard way (like most of us). Learn to control "you" and the rest is mechanics.....Happy trading everyone.

I lose trades all the time. I am lucky if I am 50% right to be honest with you. However I will also say that I have been profitable the last 6 months in a row now. Nothing spectacular at all. Given my actual trading account is very small, even though I have been trading 4 years. I have personally busted 2 accounts prior to mastering money management.

Learn money management, and you will not bust your account, period. I have posted in the past chart after chart. All of this learned from Dialist. I have developed a comprehensive money management calculator. Without the chart a simple example would be $300 deposit, risk 1% per trade it would take 322 consecutive wrong trades to bring your account to $10.

I am not talking about some mythical ideal world here. I am giving mathematical facts. I have seen literally hundreds of people come to this forum with new accounts. Double them, even quadruple them in a few months, just to see them bust out well within 1 year. Ill be honest, I was one of those.

The problem is people are greedy and believe this is some get rich scheme. They do not want to hear about a month where they spent 80 hours and gained $20. They act as if this WAS there real job and they need to pull $5k a month off a beginning account. If you want this to be your real job, its going to take time. You (rhetorical speaking) are not a fucking prodigy, learn to crawl before trying to be an Olympic sprinter.

Que

What kind of MM do you follow? I can post a quick one here for everyone to learn when I get a moment. Its called Essex MM....

Follow the link in my signature. There is no name, call it what you want. I credit Dialist (From James16 forums) as my unofficial teacher.

Nothing quick about it, but it is very comprehensive.

Que

yes, please do...when you have the time. I would be interested to have a look

First step is education...

Pip Values:

P = 1 pip using proper decimal place
E = Exchange Rate
L = Lot Size in Base Currency
C = Exchange rate of Base Currency to Local Currency with the Base Currency remaining the Base of the exchange.

1 Standard Lot = 100000 (Base Currency)
1 Mini Lot = 10000 (Base Currency)
1 Micro Lot = 1000 (Base Currency)

Pip value = (P / E) * L

Examples:

USDJPY trading 1 standard lot

Pip Value = (.01 / 122.40) * 100000 USD
Pip Value = (.000081699) * 100000 USD
Pip Value = 8.17 USD rounded to nearest cent


EURUSD trading 1 Standard lot

Pip Value = (.0001 / 1.3620) * 100000 EUR
Pip Value = (.000073421) * 100000 EUR
Pip Value = 7.34 EUR rounded to nearest cent


CHFJPY trading 1 mini lot

Pip Value = (.01 / 100.70) * 10000 GBP
Pip Value = (.000099304) * 10000 GBP
Pip Value = .99 CHF rounded to nearest cent

Now you will notice all of the pip values are in the Base Currency. You will need to change this to your Local Currency in order to see how much you are making or losing per Pip. In order to do this, you will need to multiply the pip value by the exchange of the Base and your Local Currency. The following examples are assuming your Local Currency is USD.

True Pip Value = Pip Value * C

Examples:

EURUSD pip assuming the above example

True Pip Value = 7.34 EUR * 1.3620 (EURUSD)
True Pip Value = 10.00 USD rounded to nearest cent

This happens to be a phenomenon associated with any pair that has USD as the Quote currency. EURUSD, GBPUSD, AUDUSD, NZDUSD all have a pip value the same.


CHFJPY assuming the above example

True Pip Value = .99 CHF / 1.2274 (USDCHF)
True Pip Value = .81 USD rounded to nearest cent

Notice that this time we had to divide C. This is because the Base in the exchange of the Base to Local Currency was the Local currency. This is the reverse of what we are looking for so we divide instead of multiply. Dividing is the same as multiplying the inverse of USDCHF which would be .8147 (CHFUSD).


Position Sizing:

This is one of the most important calculations you will need to make prior to entering the market. For this calculation you will need to know your % risk, your account balance, your stop loss in pips, and the pip value for the base lot. This is exactly why you need to know your stop PRIOR to entering a trade. If you do not know your stop, you can not properly calculate your position sizing correctly.

Step one; let’s figure out the amount you are willing to risk on said trade. You simply multiply your account balance by your risk %.

Step two; we will need to calculate your stop loss. This is calculated based on technicals. Examples of this would be support / resistance levels, Fib Retracements, How far the sun is from the moon etc… The point is this is very important to know prior to entering your trade.

Step three; we will need our True Pip Value. This is calculated above.

Step four; we will need to figure out how much your total pip value is. This is your stop size in pips multiplied by the True Pip Value.

Step five; we will now calculate our Position Size by dividing our Risk Amount by our Total Pip Value.

Examples:

EURUSD assuming a 2% risk and a 100 pip stop on a standard account.

Account Size = 200000.00 USD
Percent Risk = 2%
Amount Risked = 200000.00 USD * .02 = 4000.00 USD
Stop size = 100 pips
Pip value = 10.00 USD
Total pip value = 100 pip stop * 10.00 USD = 1000.00 USD
Position size = 4000.00 USD / 1000.00 USD = 4 Standard lots (If it is not a whole number Always Round Down)


CHFJPY assuming a 2% risk and a 24 pip stop on a mini account.

Account Size = 300.00 USD
Percent Risk = 2%
Amount Risked = 300.00 USD * .02 = 6.00 USD
Stop size = 24 pips
Pip value = .81 USD
Total pip value = 24 pip stop * .81 USD = 19.44 USD
Position size = 6.00 USD / 19.44 USD = 0.30 mini lots (If it is not a whole number Always Round Down, In the case of IBFX, you can buy tenths of a mini lot basically giving you a micro lot. If it were 0.31 we would round down to 0.30)


True Lot Value:

It is important to know how much, in your local currency, each lot you are buying is worth to properly calculate true leverage. To do this you simply take the lot sizes listed above and multiply them by the exchange rate of your Local Currency.

Examples:

EURUSD given 1 standard lot

True Lot Value = 100000 EUR * 1.3620 (EURUSD)
True Lot Value = 136200.00 USD

So one standard EURUSD lot is worth 136,000.00 USD


CHFJPY given 1 mini lot

True Lot Value = 10000 / 1.2274 (CHFUSD)
True Lot Value = 8147.30 USD

Again, we had to divide because USD needs to be the Base in this conversion in order to multiply. Dividing is the same as multiplying the inverse of USDCHF which would be .8147 (CHFUSD). So one mini lot of CHFJPY is worth 8147.30 USD



Position Value:

This is a very simple calculation but is needed to figure out your true leverage. You simply multiply your True Lot Value by the amount of lots you are buying. Again examples are assuming your Local Currency is USD.

Examples:

EURUSD assuming you are buying 4 standard lots

Position Value = 136200.00 USD * 4 Lots
Position Value = 544800.00 USD



CHFJPY assuming you are buying 0.3 mini lots

Position Value = 8147.30 USD * 0.3 Lots
Position Value = 2444.19 USD


True Leverage:

True Leverage is a very important part of Money Management and I will go into detail about it on another thread. This tread is how to calculate said values. In order to calculate True Leverage you simply divide your Position Value by your account balance.

Examples:

EURUSD assuming you are buying 4 standard lots with an account balance of 200000.00 USD.

True Leverage = 544800.00 USD / 200000.00 USD
True Leverage = 2.72:1



CHFJPY assuming you are buying 0.3 lots with an account balance of 300.00 USD

True Leverage = 2444.19 / 300.00
True Leverage = 8.15:1


As you can see from these calculations that none of this is overly complicated. Why on earth would you want to do this on every trade manually though? This is exactly why I suggest using a money management calculator. If this process is not streamlined, you will probably not use it. Thus I am attaching my money management calculator to this post. This money management calculator also includes a trade log that you can use.

Lets focus on this thread, EUR/USD, someone came and made a post and took away our focus. Want to know if anyone got an idea where this thing is going... Stop complaining about who wins and who lose and whos better that the other plz. If you want to do so, open another thread. Sorry if I offend someone but I want to see Pairs thread, not how I cant became millionaire.

Thanks,

Edgar

We have half a dozen saying its going up, another half dozen saying its going down....

There you go, now you're rich.

Another thing that I noticed on this forum is that retail traders are more interested in knowing where the pair will go on the next 5 min than to learn solid fundamentals on how to trade.

Well...anyways.....accounts are fed by other accounts and the market would not exist without what is called "sheep" in professional circles.

Ok guy's i am off for a sleep i am quite tired of today's mess of not deciding where i should go long or short ..... at the end it was correct with small mistakes.

Any way some times i have feeling that more i read more my head goes with mixed ideas ...

good night

Just one of the many reasons you'll fail.

m

EUR stays below these levels, bears have the upper hand: 1.4673 --1.4720

In case you wonder about p&f: http://investopedia.com/articles/tec.../03/081303.asp

Bingo there's no real way to predict, but take em as you see em..its a 50/50 thus MM

Some major confluence at today's pivot.

I'll be selling when we get there. (if)

Chart attached.

Mike

PS - Not to mention previous support and a psych level. OH BOY!!!!!

gbp/usd seems to be at the bottom ...

I got in at 1.0234 going to hang on and add to positions as it climbs and the EUR falls..

Another one:http://www.forexcalc.com/

Ok here is one method of MM...called the Essex Method...

I got it off a course sold by some Brit...excellent trader...but you need to apply it with a good system that has probabilities in the 50's at least...

1st trade

You start out with 1 lot, your target gain is 100 pips, you lose the first trade so you arrears is 100 that you were supposed to make plus 100x1 lot that you didn't make = 200 pips down in arrears

2nd trade, you must now trade 2 lots....let's say you lose this one..
you carry 200 arrears from the previous trade plus you lose 200 from this trade (2lotsx100pips) + 100 arrears you're targeting = 500 pips down in arrears

3rd trade, you now trade 3 lots, lose again, you carry 500 arrears from previous trade, plus you lose 300 pips (3lots x 100) + 100 + 500 = 900 pips down in arrears

4th trade, you now trade 4 lots this time you win, you carry 900 arrears that you can now subtract from 400 pips (4lots x 100 pips) = 500 pips + 100 pips you're targeting, so now you have 600 in arrears

5th trade, you now trade 5 lots and win again, you carry 600 arrears and subtract 500 lots = 100 arrears + 100 pips you were targeting = 200 in arrears

6th trade, you now trade 3 lots because you can only go +1 lot above your arrears total, so in this case you trade 3 lots, and you win 300 pips subtract from your carry over in 200 arrears from trade 5 and now you have 100 pips to spare which you subtract from what you're targeting 100...so now you have 0 arrears and your balance is cleared...

So let's tally up:

3 losses, 3 wins...

Calculate the Wins and Losses

You now have $1200 in wins and $600 in losses....for a total of $600 net profit from a 50/50 win situation....

This is simplified....

Ok, I'm done with MM, there are a few other techniques, but this is a simple one to grasp..

This isn't money management, is account suicide. You can bet on red (or black) at the roulette doubling the amount each time you lose and then you win the first amount, but this is not trading.....