FX and Fixed Fractional Positioning

[Kryzz]

Hi all,

Relatively new to FX at this stage, just trying to guage whether position sizing is determined the same as it is with equities. Just playing around on the Oanda FXGame at the moment, i just entered short with the EUR/GBP.

Entry: 0.87848 Stop Loss: 0.89517 Risk: 0.01669
Risk $1,000 per trade. 1,000/0.01669
=59,916.

So does this mean I would trade 6 mini lots roughly? Do people take this approach and simply trade variable lot sizes (which I think Oanda allows) Also, is it more common to deal in terms of $ risk per trade, or Pips per trade?

Cheers,

Shaun.

 

[wabbit]

There is one slight aberration in your computations:

You are trading the EUR/GBP but your account is in dollars. You shouldn't be comparing apples with oranges.... my recommendation, work everything back to the account currency.

As for dollars or pips... its a personal preference. Many "professionals" like to talk pips because they claim it focuses less on values of trades, but if you don't have in the back of your mind how much a pip is worth then I think you're steaming towards danger?

$0.02c


wabbit

 

[Kryzz]

There is one slight aberration in your computations:

You are trading the EUR/GBP but your account is in dollars. You shouldn't be comparing apples with oranges.... my recommendation, work everything back to the account currency.


wabbit

Thanks for the insight wabbit, could you provide an example if possible assuming 100k bal, 1% risk? Still having a bit of determining risk/position sizing for foregin currencies.

Cheers

Shaun

 

[Stormin_Norman]

http://www.forexproject.com/forex-resources/pip-calculator/

i think that's what u want sir.

 

[AbundantIncome]

I need to learn a bit about this. My experience has been this, earning for the week (if any), lost in one day or few hours !!!

My stop loss needs a lot of fine tuning. I lost up to 6 grands in paper recently !!! Outch !!!

 

[white_goodman]

to work it out say you have a $100k USD account...

you trade the EURUSD with 1 standard lot each pip = $10

easy... say you trade EURGBP, your pip value is based upon the price of the GBPUSD which is 1.5800 so your pip value is $15.80

If your account balance is in AUD i find it easier to convert that to USD intially as pip values are generally worked back to USD....

if you are trading say AUDCAD, then you base it on the USDCAD, but because USD is first its 1/USDCAD price to get pip value...

 

[Kryzz]

White...So what would my position size be in this instance (no. of std. lots)? Risk of 305 pips. 1% risk on 100k AUD A/C? Went to http://www.forexproject.com/forex-resources/pip-calculator/ and got a pip value of roughly $13 AUD. Sorry for the mundane questions, probably overcomplicating something too simple

Shaun.

 

[wabbit]

See: http://www.earnforex.com/position_size_calculator.php

Hope this helps.


wabbit

 

[Kryzz]

Bingo!! Thanks heaps Wabbit.

 

[wabbit]

It is still very important (IMHO) to understand how it all works -- I still find myself tied up in logical-knots some nights trying to understand the whole margin/leverage/account type/etc combination... Some days it is clear in the mind, some days it just gets confusing again!

Although the page gives you a number of lots, it is important that you know when the answer is right and when it is wrong. If you cannot, then the day you take the trade with the wrong position size is the day when it all turns to ****.


Hope this helps.

wabbit

 

[AbundantIncome]

It is still very important (IMHO) to understand how it all works -- I still find myself tied up in logical-knots some nights trying to understand the whole margin/leverage/account type/etc combination... Some days it is clear in the mind, some days it just gets confusing again!

Although the page gives you a number of lots, it is important that you know when the answer is right and when it is wrong. If you cannot, then the day you take the trade with the wrong position size is the day when it all turns to ****.


Hope this helps.

wabbit

isn't it that the case ? wrong position, wrong time !!!

I thought I had a sell last night but turned out it was a buy ??? not sure how it happened but i give the system the benefit of the doubt again ...

although sometimes, the current position not listed in trading platform then i get another limit order, then two positions got executed !! how annoying could that be ????