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Chapter 33, Part II. Position Size Calculation.

Discussion in 'Complete Trading Education- Forex Military School' started by Administrator, Apr 18, 2012.

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  1. Administrator

    Administrator Just Administrator :-)

    Sep 24, 2007
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    Part II. Position Size Calculation. [​IMG]

    Commander in Pips: I’ve decided to make a small add-on to the money management chapter and still discuss the framework of position size calculation due risk provision. I remember that you’ve solved tasks about profit/loss and margin very well, so probably you can do this by yourself easily. I hope you don’t mind if I show you some examples. In fact, we have just one additional parameter – risk value in a single trade. All other calculations remain the same.

    I’ve decided to do a demonstration of why you need to calculate a safe amount to trade. Call out an entire platoon and load them all into one van.


    Pipruit: You’re right. Too many troops in too little space, and we could be missing a whole platoon in the next battle if one van has a flat tire. Some guidance initially doesn’t hurt.​

    Commander in Pips: Very well, then let’s start with it. Do you remember what parameters we’ve used when we calculate profit/loss, margins and so on?

    Pipruit: I do, they are:

    - Currency pair that we trade;

    - Currency of our account;

    - Cross rates if we need to convert results into some other currency – neither counter nor base currency.

    Commander in Pips: Absolutely correct. Since we want to calculate not just the financial result but also the limit of potential loss in each trade and lot size, additionally we will need:

    - Total assets value on account;

    - Maximum acceptable loss value in percents in each trade;

    - Stop-loss value in pips.

    #1 Administrator, Apr 18, 2012
    Lasted edited by : Oct 9, 2016
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