Lot sizes

[zmaalinvest]

I'm getting ready to put my money into the forex market. I'm having some problems with lot sizes though.

Say, I have a $1,000 account and I want to trade 5% or $50 of my account.

For some reason the way most people explain it, I'm having a hard time understanding lot sizes but this is how I understand it:

1 lot = $1/pip
0.1 lot = $0.1/pip - mini
0.01 lot = $0.01/pip - micro

Ok so now I want to trade EURNZD, buying at say 1.64000 with a S/L of 1.63500 and T/P at 1.67000.

So basically, according to my understanding, to lose $50 max, I'm gonna need to buy 1 mini lot of EURNZD.

1.64000 - 1.63500 = 500
500 x 0.1 = 50

I used a calculator online and I'm not sure how but it came down to 0.21 lot for me to lose a max of $500 on my demo account on a $10,000 account. The price swings seemed to be in the direction I was hoping they would after I did that.

Can someone please simplify this for me? How does leverage affect this? What's a simple formula for me to use and know exactly how much I'm risking?

 

[LoRio]

I'm getting ready to put my money into the forex market. I'm having some problems with lot sizes though.

Say, I have a $1,000 account and I want to trade 5% or $50 of my account.

For some reason the way most people explain it, I'm having a hard time understanding lot sizes but this is how I understand it:

1 lot = $1/pip
0.1 lot = $0.1/pip - mini
0.01 lot = $0.01/pip - micro

Ok so now I want to trade EURNZD, buying at say 1.64000 with a S/L of 1.63500 and T/P at 1.67000.

So basically, according to my understanding, to lose $50 max, I'm gonna need to buy 1 mini lot of EURNZD.

1.64000 - 1.63500 = 500
500 x 0.1 = 50

I used a calculator online and I'm not sure how but it came down to 0.21 lot for me to lose a max of $500 on my demo account on a $10,000 account. The price swings seemed to be in the direction I was hoping they would after I did that.

Can someone please simplify this for me? How does leverage affect this? What's a simple formula for me to use and know exactly how much I'm risking?

Hey welcome.

You are willing to risk 50$
Your leverage is 50
One full lot (1.0) equals 100.000 units of currency
Your stop loss is 50pips away

Which means
-Your pip worth must be 1$ [50$ / 50pips]
-you find your desired lot
1 Lot=10$
0.1 Lot=1$
0.01 Lot=0.1$
0.001 Lot=0.01$

Leverage defines your maximum acquisition ability.For instance
You have 50$ , 500 leverage
Your maximum acquisition amount is 50$*500 => 25000$

Let's use a simple example .
Your account (deposit) is in $ dollars (50$).Your leverage is 500.
Your pair is EURUSD(lets say at 1.36000) which shows you how many dollars you need to buy ONE Euro.
You calculate the acquisition cost of one full lot 1Lot , which would buy 100000 Euros.
100000(units of currency)X1.36000(cost of currency)=136000 $

The maximum possible lot you can trade is :
(Balance X Leverage)/1Lot Cost =>
(50$ X 500)/136000$ =>
25000$/136000$ =>
0.18 Lot (which would bring each pip value to 1.8$)

So on your original question :
A. Calc your SL in pips + Spread <= we will call this number J
B. Find the amount you want to risk in $ <= we will call this number M
C. You want to find the Lot to open an order <= lets call this X

for ***/USD pairs

X=(M/J)/10;

 

[zmaalinvest]

Hey welcome.

You are willing to risk 50$
Your leverage is 50
One full lot (1.0) equals 100.000 units of currency
Your stop loss is 50pips away

Which means
-Your pip worth must be 1$ [50$ / 50pips]
-you find your desired lot
1 Lot=10$
0.1 Lot=1$
0.01 Lot=0.1$
0.001 Lot=0.01$

Leverage defines your maximum acquisition ability.For instance
You have 50$ , 500 leverage
Your maximum acquisition amount is 50$*500 => 25000$

Let's use a simple example .
Your account (deposit) is in $ dollars (50$).Your leverage is 500.
Your pair is EURUSD(lets say at 1.36000) which shows you how many dollars you need to buy ONE Euro.
You calculate the acquisition cost of one full lot 1Lot , which would buy 100000 Euros.
100000(units of currency)X1.36000(cost of currency)=136000 $

The maximum possible lot you can trade is :
(Balance X Leverage)/1Lot Cost =>
(50$ X 500)/136000$ =>
25000$/136000$ =>
0.18 Lot (which would bring each pip value to 1.8$)

So on your original question :
A. Calc your SL in pips + Spread <= we will call this number J
B. Find the amount you want to risk in $ <= we will call this number M
C. You want to find the Lot to open an order <= lets call this X

for ***/USD pairs

X=(M/J)/10;

Brilliantly explained! Thank you so much! I don't understand why I couldn't find this anywhere online or I'd only find a piece of the puzzle, maybe I wasn't looking for the right thing. Thank you, I think I get it now

Edit: I would probably need to do a bit more research on this to figure out what each pip value for each currency is for whichever broker I choose but this definitely opened my eyes and I now know what I need to do. 2-3 more weeks and I'm going in

 

[zahirul]

Remarkably discussed! Thanks a lot a lot! We don't get the reason why We would not come across this kind of wherever on the net as well as I'd simply come across a bit of the particular problem, it's possible We had not been trying to find the proper matter. Thanks a lot, I'm sure We get it now

Modify: I'd personally almost certainly should do a bit more investigation within this determine what every single pip value for every single forex is designed for regardless of what broker We select yet this kind of definitely exposed my face and We now really know what I must accomplish. 2-3 more 2 or 3 weeks and I am about inside

 

[Rambo35]

Brilliantly explained! Thank you so much! I don't understand why I couldn't find this anywhere online or I'd only find a piece of the puzzle, maybe I wasn't looking for the right thing. Thank you, I think I get it now

Edit: I would probably need to do a bit more research on this to figure out what each pip value for each currency is for whichever broker I choose but this definitely opened my eyes and I now know what I need to do. 2-3 more weeks and I'm going in

Depending on your broker you may have a calculator as well as explanation on how to use it. It is best to fully understand it and then use the calculator to speed things up.

 

[mistersmith14]

Nice thoughts. I wanna do it as well.