Converting commissions to pips: I am doing this right? | Forex Factory

Options

Permalinks
Print Thread

Similar Threads

Right Wrong Right Wrong Right Wrong 13 replies

Why Is Price Doing What It's Doing? 65 replies

Trading Prerequisites - Doing it Right 46 replies

4105 No order selected? Em i doing this right? 1 reply

Broker with hands down tightest spread/commissions 7 replies

Converting commissions to pips: I am doing this right?

  • #1
  • First Post: Jul 13, 2012 6:16am Jul 13, 2012 6:16am
Hi everyone,

Since I'm a scalper the spreads and the commissions are very important to me, to make the process of choosing a good ecn brooker I converted the commissions into pips (of course I also taking other factors in, like slippage, problems with users, etc...)

For converting the the commissions I did this calculations:

1. See who much the broker was charging for one million.

2. Multiply that value by two to get the value for the opening and closing the trade.

3.See how much is the pip in one million.

4.With using the value of the pip per million I convert the price of the commission into pips.



Example

1. The broker charges me 20.5€ per million

2.Multiply 20.5 by 2 ( 20.5€ charged when opening a trade and 20.5€ for closing the trade) 20.5*2=41€

3.The price of the pip in one million 82€

4. So if one pip costs 82€ then 41€ of commission represents 0.5 pips.


I used very simple values in this example to facilitate the math, but in the 4 steps with more complicated number I would use cross multiplication to obtain that value.

Is my calculations correct or I'm missing something?

Thank you in advance.
  • #2
  • Jul 13, 2012 7:05am Jul 13, 2012 7:05am
Quoting Demos4x
Hi everyone,

Since I'm a scalper the spreads and the commissions are very important to me, to make the process of choosing a good ecn brooker I converted the commissions into pips (of course I also taking other factors in, like slippage, problems with users, etc...)

For converting the the commissions I did this calculations:

1. See who much the broker was charging for one million.

2. Multiply that value by two to get the value for the opening and closing the trade.

3.See how much is the pip in one million.

4.With using the value of the...
Correct, however not that difficult to figure out either.
  • #3
  • Jul 13, 2012 7:11am Jul 13, 2012 7:11am
Quoting Custos
Correct, however not that difficult to figure out either.

Thank you for the reply.

Yes it seems logic to me too, but when I used the dukascopy calculator for spreads I was getting different numbers, so I start to think that maybe I was doing something wrong. But thanks for the confirmation I was doing something wrong but in the dukas calculator.
  • #4
  • Jul 13, 2012 8:44am Jul 13, 2012 8:44am
Quoting Demos4x
Thank you for the reply.

Yes it seems logic to me too, but when I used the dukascopy calculator for spreads I was getting different numbers, so I start to think that maybe I was doing something wrong. But thanks for the confirmation I was doing something wrong but in the dukas calculator.
Surely the spreads on different currencies will change throughout the day ?

Different currencies have different rates, so the Euro / Usd will be less on the spread than other currencies.

Are you starting with 1 Million £ or $......LoL...good luck.
  • #5
  • Jul 13, 2012 9:18am Jul 13, 2012 9:18am
1 million!!!
  • #6
  • Jul 13, 2012 1:33pm Jul 13, 2012 1:33pm
Quoting Mossy68
Surely the spreads on different currencies will change throughout the day ?

Different currencies have different rates, so the Euro / Usd will be less on the spread than other currencies.

Are you starting with 1 Million £ or $......LoL...good luck.

I know that must of the spreads varies during the day and from each pair , I wasn't talking about spreads I was talking about commissions, so I could add the value of the spread to the value of the commissions to see if its worth it.Some commissions are higher than 1.5 pips.

I also know that the value of the pip changes form pair to pair not much really but it changes it, I was thinking only trading eur/usd but if i wanted to trade other pairs I would create a little chart or something.

Who said I was starting with 1 Million?

And also I said 1 million traded not 1 million in the bank I can trade 1M if I have 100.000 and use a leverage of 10:1
  • #7
  • Jul 13, 2012 1:37pm Jul 13, 2012 1:37pm
Just be carefull when you start and dont forget your stop loss's, I have blown my account to many times.

Start with 1% - 5% of your account on any one trade.

If I had a million I would'nt be here.....Good Luck....
  • #8
  • Jul 13, 2012 1:49pm Jul 13, 2012 1:49pm
Quoting Mossy68
Just be carefull when you start and dont forget your stop loss's, I have blown my account to many times.

Start with 1% - 5% of your account on any one trade.

If I had a million I would'nt be here.....Good Luck....

Yes not thinking risking more than 1.8% or less to have the safe net for 2% in case of slippage.

Today I had a stupid idea but may work, I m thinking to starting a blowout account with very few money but with a high leverage risking 5 to 8% to help me losing my fear and become more comfortable when star using an account risking less than 2%.

Stay well.
  • #9
  • Jul 13, 2012 1:52pm Jul 13, 2012 1:52pm
Blow Out Account

If you looked at my account today that would put you off for life, I usually aim at 5%, but lost a few big one's today on Oil, then tried to "Chase the Dragon", and lost a lot of money, still waiting for oil to drop at 9.50pm with 10 minutes to go (GMT).

Maybe try a demo account, although there is nothing like trading and scalping "Live"
  • #10
  • Jul 13, 2012 2:05pm Jul 13, 2012 2:05pm
Yes today during the morning was kind of stale could gain some pips but nothing much.

That is the biggest problem when someone starts with scalping, as to be in a live account to see if the would take your account to the ground.
  • #11
  • Jul 13, 2012 2:08pm Jul 13, 2012 2:08pm
It certainly would, and has done, so start off slowly and build up, maybe you need to get burnt a few times early on, but do not do what most people do, get clever and make a few pips then start risking to much.

As for the percentages in the commisions why are you worrying about that ? Just try making some PiPs 1st...
  • #12
  • Jul 13, 2012 2:12pm Jul 13, 2012 2:12pm
I like to have all the information in front of me, before I start, its a physiologic thing, more confidence, etc...
  • #13
  • Jul 13, 2012 2:15pm Jul 13, 2012 2:15pm
In the heat of the battle (scalping) you won't have time to work out percentages, unless it is worked out before you enter the trade. (1.8% of your account balance ?)
Stick to £1 or $1 a pip, depending on your account size and currency, to begin with.
  • #14
  • Jul 13, 2012 2:22pm Jul 13, 2012 2:22pm
Quoting Mossy68
I have blown my account to many times.

Start with 1% - 5% of your account on any one trade.
IMHO 1% is the max amount to use to scalp on per DAY. Not per trade. Anything over 5%/month consistently would be awesome. Higher risk does not mean higher rewards. That's my observation after a few years at this.

Demos4x, do you know what ratio of spread:return you're striving for by scalping?
  • #15
  • Last Post: Jul 13, 2012 3:17pm Jul 13, 2012 3:17pm
Quoting EmeraldEyes
IMHO 1% is the max amount to use to scalp on per DAY. Not per trade. Anything over 5%/month consistently would be awesome. Higher risk does not mean higher rewards. That's my observation after a few years at this.
Don't be afraid to challenge yourself. Open a small, second account of 10k (or whatever) and trade it like you normally do only with 4 or 5x the lot size.

It's fascinating and you might even learn to be MUCH more careful with your trades. You could possibly even trade less and enjoy life more.

Mark Giffords said the "sky is not the limit". Take that as you will.

Have a great year.
When the Joker is in the deck.. fear not and play it well
0 traders viewing now