Money management for multiple market orders

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Hello all,

I am currently working on money management when entring multiple orders. I know how to calculate # of lots for one order considering risk % and account balance.

That would be:

Account Balance=$5,000; Risk=2%

Buy EURUSD at 1.4755 with Stop Loss 50 pips. Since Account Currency is USD, Mini Account Type (10,000 units) then PipValue=$1.

# of Lots = (5,000 x 2%) / (50 pips x $1) = 2 mini lots (0.2 lots)


Questions:

1./ How do I calculate # of Lots for 2nd, 3rd order and so on?a

2./ How many orders can I enter? Where is my limit?

3./ Do I have to check Free Margin before entering next order?

4./ Is "MODE_TICKVALUE" always going to give me correct PipValue which I can use in my formula above directly without any other calculations?

(e.g. my account wouldn't be in USD or I would be using Standard Account (100,000))

5./ How does Account Leverage come into play when talking about Money Management?


Thanks for help

Draho

 
draho:

Hello all,

I am currently working on money management when entring multiple orders. I know how to calculate # of lots for one order considering risk % and account balance.

That would be:

Account Balance=$5,000; Risk=2%

Buy EURUSD at 1.4755 with Stop Loss 50 pips. Since Account Currency is USD, Mini Account Type (10,000 units) then PipValue=$1.

# of Lots = (5,000 x 2%) / (50 pips x $1) = 2 mini lots (0.2 lots)


Questions:

1./ How do I calculate # of Lots for 2nd, 3rd order and so on?a

2./ How many orders can I enter? Where is my limit?

3./ Do I have to check Free Margin before entering next order?

4./ Is "MODE_TICKVALUE" always going to give me correct PipValue which I can use in my formula above directly without any other calculations?

(e.g. my account wouldn't be in USD or I would be using Standard Account (100,000))

5./ How does Account Leverage come into play when talking about Money Management?


Thanks for help

Draho



Is there anybody who could help at least litle bit?


Thanks

Draho

 
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draho:

Hello all,

I am currently working on money management when entring multiple orders. I know how to calculate # of lots for one order considering risk % and account balance.

That would be:

Account Balance=$5,000; Risk=2%

Buy EURUSD at 1.4755 with Stop Loss 50 pips. Since Account Currency is USD, Mini Account Type (10,000 units) then PipValue=$1.

# of Lots = (5,000 x 2%) / (50 pips x $1) = 2 mini lots (0.2 lots)


Questions:

1./ How do I calculate # of Lots for 2nd, 3rd order and so on?a

2./ How many orders can I enter? Where is my limit?

3./ Do I have to check Free Margin before entering next order?

4./ Is "MODE_TICKVALUE" always going to give me correct PipValue which I can use in my formula above directly without any other calculations?

(e.g. my account wouldn't be in USD or I would be using Standard Account (100,000))

5./ How does Account Leverage come into play when talking about Money Management?


Thanks for help

Draho



draho:

1./ How do I calculate # of Lots for 2nd, 3rd order and so on?a

The way I understand it what you want to do can be accomplished in two ways,

1 is use AccountFreeMargin(), this function shows you how much you have after deducting the current open orders if they are loosing.

Another is to assume that the trade is a max loss and hence forth deduct the full loss from the accountBalance() and multiply that by the number of the open orders.

2./ How many orders can I enter? Where is my limit?

The broker is the one that sets the limit, so you might want to ask the broker that question.

3./ Do I have to check Free Margin before entering next order?

Yes it is a good idea to do so because you could have enough money in your balance to open the order but the current trades that are open might be loosing therefore Free Margin will give you the actual amount of money you have with all the open trades included.

4./ Is "MODE_TICKVALUE" always going to give me correct PipValue which I can use in my formula above directly without any other calculations?

If what you are asking is weather the MODE_TICKVALUE gives you a one pip increment in currency value than the answer is yes.

5./ How does Account Leverage come into play when talking about Money Management?

the more Leverage you have the more trades you can make and the bigger the lots even though you might not have enough money to make the trade, but the risk is you can loss money a lot faster if you use Leverage unwisely.

Hope this helps

Hazem

 

Hazem,

Thanks a lot. Let me explain question #2 better...., it actually ties to the question #1.

Let's say that I use 2% risk for each trade. So, for example, if I loose all of the 5 trades I entered into the market my loss would be 10% of my account balance.

My question was whether this is a good approach (2% per trade) and how many trades would be reasonable to enter or how many % of my account balance is safe to risk ?


Thanks

Draho

 

draho:

i would rather you check this link, or any other, a better way would be to google money management there you will see diffrent openions here i one i thought was good.

http://www.goforex.net/forex-money-management.htm

Hazem

 
Thanks !!!
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