# 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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 Part II. Position Size Calculation.

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.

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Lasted edited by : Oct 9, 2016