Does Turtler care about Forex?

Discussions about Money Management and Risk Control.
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jennyforex
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Does Turtler care about Forex?

Post by jennyforex » Wed Jan 19, 2005 10:52 pm

As a novice, I've been well travelled among many materials seeking answers for the implementing Turtler's rules in Forex. Quit a difficult trip. Fortunitly, I find this forum! Could anybody kindly help me in the following problems?
1. Dollars per point

To caculate dollars per point, you need to set quantity of unit first. For example:
10,000 units EURUSD makes 1pip=$1
If it's 20,000, 1pip=$2

Shoul I always use 10,000 units to caculate the dollars per point?

2. My account is $10,000, ATR=85, 1pip=$1.
Position Size = (1%*$10,000)/(85*$1)= 1.1765
So, I can trade 1 contract. My broker don's use lot or contract, but allows whatever unit you desire to trade. So, if I translate the contract to units, 1 contract=$10,000, or 1 contract=$100,000?

3. If 1 contract=$10,000, I trade a leverage of 50,
First position = 11765*50 = $58,8250
My account is $10,000, it is $500,000 after leverage. The first position is already bigger than my leveraged account.
Is the "contract" already leveraged? How can I apply the fomular correctly according to my own leverage?

Thanks in advance!

bazzacontango
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Post by bazzacontango » Sat Jan 22, 2005 4:34 am

Since no one else has replied:
Which size account, are you trading:- a standard 100000 lot size account has a nominal USD10 a pip, while a mini-account is 10000 and nominal USD1 a pip.

1. Well assuming you're trading a mini margin forex account. Each lot is equivalent to 10000 of the base currency.
Where the currency pair is quoted as xxxUSD, then a 1 pip move is 1USD. as in EURUSD.
http://www.gcitrading.com/mini-specifications.htm
http://www.gcitrading.com/pip-values.htm

Other pairs have different pip values. Some platforms may have non-standard method of quotation.

2. In your example you would trade 1 lot of 10000 units of EURUSD. If the platform allows you to trade exact units then 11765 units, would make your 85 pips be worth 10000* 1%= USD100.

3. Margin is so you don't have to put up all the 10000USD or Euro for a one lot trade.
You only need $200(*1.1765USD) real money to initiate the trade. You won't have much breathing room, since you're risking about USD100 each trade.

So assuming you won't want to continue past a drawdown worse than 50%, you can fund the account with only USD5000.

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