Hello guys, I'd like to ask for some feedback to Fiji Trader, Diallist and other experts in Money Managment.
I have elaborated a very simple Excel file that I fill in before every trade in order to know how many lots should I position in that specific trade. It has the following fields:
- Account Balance: let's say 10k US
- Risk per trade: I have it at 3%
- US$ per pip: this depends on what currency I am looking into (EURUSD 10 $ per pip, USDCAD 8.50 $ per pip, CHF is around 7.70 $ per pip, etc, GBPUSD 10$ per pip, etc)
- Stop Loss size: here I input how long is my stop loss in pips.
Well, finally, I have Excel to calculare a small formula to tell me, according to the stop loss for this trade and the pips per $ of this specific currency, what lot size should I trade in order to, should my stop loss being hit, I will not lose more than a 3% of the account balance.
For example, if I am trading EURUSD (10 $ per pip), my stop loss for this trade is 30 pips, and my account balance at this time is 10k, then the system will tell me to trade exactly one lot. If, for the same scenario, the stop loss is 15 pips, I can trade 2 lots and still I wouldnt risk more than a 3% of the account. Conversly, if the stop loss is 60 pips, then I will trade only 0.5 lots, etc.
What do you guys think of this? it's basically a system that tells me how many lots do I trade in order to risk a FIXED 3% of my account at every trade.
Thank you!
I have elaborated a very simple Excel file that I fill in before every trade in order to know how many lots should I position in that specific trade. It has the following fields:
- Account Balance: let's say 10k US
- Risk per trade: I have it at 3%
- US$ per pip: this depends on what currency I am looking into (EURUSD 10 $ per pip, USDCAD 8.50 $ per pip, CHF is around 7.70 $ per pip, etc, GBPUSD 10$ per pip, etc)
- Stop Loss size: here I input how long is my stop loss in pips.
Well, finally, I have Excel to calculare a small formula to tell me, according to the stop loss for this trade and the pips per $ of this specific currency, what lot size should I trade in order to, should my stop loss being hit, I will not lose more than a 3% of the account balance.
For example, if I am trading EURUSD (10 $ per pip), my stop loss for this trade is 30 pips, and my account balance at this time is 10k, then the system will tell me to trade exactly one lot. If, for the same scenario, the stop loss is 15 pips, I can trade 2 lots and still I wouldnt risk more than a 3% of the account. Conversly, if the stop loss is 60 pips, then I will trade only 0.5 lots, etc.
What do you guys think of this? it's basically a system that tells me how many lots do I trade in order to risk a FIXED 3% of my account at every trade.
Thank you!