Trade Size Management

How to Determine Proper Position Size When Trading Forex, Metals, Futures and Stocks

Jimmy Putnik

• Verlag: 1kkbooks
• Jahr: 2017
• ISBN:
  9781537832531
• Thema: Business
• Thema: Foreign Exchange

Your trading strategy is Great; But your money management is Failing you.

We all know that 95% of traders lose money. The truth is that this has nothing to do with their strategy, Its all about money and trade size management.

An avarage profitable trader has a win rate of only 50-55%. They have Mastered the skill of money management and so should you.

In this course you will learn: -

The difference between Profitable traders and Losers; The simple secret you should know

Trading is a 50/50 chance game; How to make that work in your favor.

Allign your trading to your goals; to eliminate guess work and panic trading.

And of course, in all this we will handle the math of trade sizing and management.

This is the Bridge to your future profitability.... get your copy now!

UNDERSTANDING BASIC TERMINOLOGIES

WHAT IS A PIP

What is a pip? In order to trade successfully you need to understand what a pip is and how to calculate its value. A Pip stands for

percentage

In = smallest price change

point

It is the smallest price change that a given exchange rate can make. An increase or decrease in pips represents a profit or loss in your Forex trade. Let me explain further. When currencies are quoted they are mainly quoted to the fourth decimal place, this is also true for silver. Exceptions of pairs that include the Japanese yen (JPY) as well as commodities such as gold, oil Brant and gas which are quoted to two decimal places.

When we look at the EUR/USD pair and see it move from 1.3130 to 1.13131, it has moved 1 pip because the fourth decimal point has increased by 1.

A 1 pip move for the USDJPY we can see is 77.60 to 77.61 because the second decimal point has increased by 1.

In major pairs quoted against the US dollar we calculate the value of a pip as follows

The EUR/USD has an exchange rate of = 1.3130

If one pip = 0.0001

We divide

which gives us a pip value of €0.0000761

Let’s turn this into a forex deal to see what the Pip would represent in either a profit or loss.

Deal 1: Sell €100,000 worth of EUR/USD at 1.3130

Pip value = €0.0000761 × €100,000 = €7.61 ($10)

if the deal is closed at 1.3120 with a 10 Pip profit the total profit will be: -

€7.61 × 10 = €76.10...