Help with position sizing

Hello everyone!

I've been trading for a while without position sizing and I'm really interested in the money management side of my system. I have 2000$ in an account and wan't to lose a maximum of 40$ (2%) per trade. I only wan't to base my entries by that, not by a S/L point on the graph or different to price. Can anyone help me with the maths?

I though of something like this, although it doesn't work: 2000/40 * Price atm= Position Size

Thank you very much!

Daniel

(Account balance x Risk%) / SL / pip value = Lot Size

http://www.earnforex.com/position-size-calculator

That's perfect. Thank you very much guys. Just one more question, I know, I'm a noobie!

Pip value: that's taking into account current price value right?

Thanks!

Sorry guys, still can't make sense of this, find it quite embarrassing. Example:

(2000$*0.02) / 40$ / 14$ = (40$/40$) / 14$ = 0.07

If I use 3000$, same result:

(3000$*0.02) / 60$ / 14$ = 0.07

That means that I don't increment my lot size depending on my account size...

Might the problem be in that I always enter a trader risking 2% of my total capital?

Thanks

SL in pips = 20
Pip value in $ = 1$ on EURUSD

Lot Size = (2000 x 0.02) / 20 pips / 1$ = 2

Lot Size = (3000 x 0.02) / 20 pips / 1$ = 3

Or

http://www.earnforex.com/metatrader-...ize-Calculator

This topic is confusing. This is the formula I thought works for all pairs: Lot size = (account balance * risk percent) / (Stoploss + Spread)

But the earnforex calculator asks what currency is your account is denominated in and if you choose you want to trade GBPJPY, it asks what the ASK price for USDJPY is...So don't know who's right here.:/

http://www.babypips.com/school/presc...-and-loss.html

I think Oanda desktop version has a built in calculator for you at a very usefully place: when you open a trade. There you enter the trade sise and the SL price and it will calculate and show for you the amount which will loose at that level. Same for TP.

Make a demo account at they and set your balance to the same amount which if your like account at another broker. This case is 2000.

Next step is the the loss calculation. 2000 x 0.02 = 40$. You are allowing for your next trade to loose 40$.

Next step is watch the chart or your trading system and set the SL level. Lets be 40 pip.

100.000 unit is 1 lot. 1 lot at EUR/USD if it moves 1 pip, than it makes 10$.
If you want to lose / gain 40$ and if you take 1 lot, than only 4 pip needed.
But you set the distance to 40 pip, so need to calculate the position size: it is 10,000 units.

If you want 20 pip SL, than you must find out what amount of units has 1 pip move value of 40/20 =2$. It is the 20.000 units.

Easier to remember 10,000 units at EUR/USD if moves 1 pip it is 1$ in plus or minus.


if you don't know this math you are probably a beginner trader.
I would like to highly suggest:
Risk only 0.2% /trade, not 2%! -because you are a beginner and very probably you will lose 50% of you account in 4 months.

After a year raise your risk to whatever you like and you are comfortable. Until that go and buy a motorcycle for adrenaline, anyway will you loose the price of that in your first 4 month

4$ loose in 80 pip calculation:
10,000 unit in 80 pip loose 80$.
4$ / 80$ = 0.05$ need to loose in 1 pip
1,000 unit : 0.1$
500 unit it is 0.05$ => 500 unit needed for trade size in order to loose 4$ in 80 pip.

When you got bored, don't raise the trade size more than the double of the size what have you used usually, even if you have more money in account by founding. At a certain level has a huge psihological level. I have filled out my account and changed the broker and the max leverage too.
I couldn't detach from money, when I saw I "won" 1100 usd in 11-12 seconds ! My trade side by mistake wasn't 1 lot(that I wanted to do), but 10 lots... even 1 lot it would be to much for 10k account. I lost my emotional stability and lost half of the account in a few days! My trade size wasn't a 100% increase, but a 1700%! It was an expensieve lesson.

Just play a bit with 500 units a few weeks: 4-6, than with 1000 units other 5-6 and you will see hot is going and loosing money or not. If you are loosing don't raise, go back to demo account until you have 3 month consecutive positive balance there. Save your account! There will be plenty of trade opportunities.

Of course the pair is requested because the pip value isn't the same on all pairs.