Risk management

joshcufleyuk

Recruit
Messages
1
Hi guys and girls, new here. Hello.
Okay, so I have pretty much the gist of things figured and have a couple of trading signals I’m using. But one of them has a risk management which I’ll copy below. And I cannot make heads nor tails of it and I’m not stupid. I get the basis of it, but actually getting a figure just gets me!
Using £3000 starting with 1:200 leverage FYI.
If anyone can elaborate or explain it in better terms that would be amazing! (Oh and I’ve asked the person running it who hasn’t replied)

“In order to make sure every pip worth the same value in terms of money on a weekly basis, this is what I do:

1. I calculate 5% of my current balance

2. I multiply the amount with my leverage

3. That amount is my weekly "trade size"

4. If needed, I can calculate my "trade size" to LOTS here: babypips.com/tools/forex-calculators/positionsize.php I add my "trade size" to the "account balance" box with 1% risk (the currency does not matter).

Example:

1. Balance: $1000 ---> 5% = $50

2. Leverage: 1:100 ---> $50*100 = $5000

3. Weekly trade size: $5000

4. $5000 in standard LOTS: 5

Every week I make the same calculation based on my NEW balance.

The meaning is I always trade bigger if I won and smaller if I lost, on a weekly basis. This method keeps my account live at all times!

The idea is every pip worth the same amount of money during the week, so the number of pips won or lost can be translated to money, instead of calculating 5% risk after every position.

So if I lost 50 pips and then won those 50 pips back, my balance will be just where it has started, and no loss was made.”

Thank you!
 
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