![MQL5 - Language of trade strategies built-in the MetaTrader 5 client terminal](https://c.mql5.com/i/registerlandings/logo-2.png)
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
After rereading all the replies along my original post (with a special thanks to @whroeder1) I changed a bit my understanding about this topic.
I will ask politely if @whroeder1 could help me here but the ask or invitation extends to everyone who would like to contribute.
I understood that the evaluation of StopLoss and LotSize using Risk Return model is a equation with two degrees of freedom.
In order to solve it I must fix one degree of freedom, making it a constant, and evaluate the remaining one.
Scenario #1
I did not understand from your previous explanations how to do that.
Scenario #2
I did not understand from your previous explanations how to do that.
Scenario #3
I did not understand from your previous explanations how to do that.
It is simple if the quoted currency is same with your account currency.
So, returning to your AUDUSD example and assuming that your account is in US dollars,
If your lot size is 0.1, then you risk 1 $ per pip (Delta per lot: 10 $).
Then, if you want to risk your 120 $ by buying 0.1 lots at 0.76461, requires 120 pips stop loss.
You need to place your stop at 0.75261 and your TP should be at 0.78861 for 240 $ return.
0.76461 is the ask price here and ... 0.75261 and 0.78861 are bid prices.
Hope this helps.
In order to solve it I must fix one degree of freedom, making it a constant, and evaluate the remaining one.
Scenario #1
Scenario #2
I did not understand from your previous explanations how to do that.
Scenario #3
I did not understand from your previous explanations how to do that.
That part I do not understand. You are describing an equation (OK) but in a not so clear way. So, correct me if I am wrong in my interpretation about it.
- Scenario #1
Account Balance * percent/100 = RISK = OrderLots * (|OrderOpenPrice - OrderStopLoss|) * DeltaPerLot()
Should be:
#Scenario 2
Seems to be solved by the math above.
#Scenario 3
Maybe your interpretation is due a code of lot size and stop loss coupled with a decision logic to enter a trade or not. That is not my intention. The idea here is to abstract the calculation in order to decouple the math of lot size and stop loss calculation from the logic of entering a trade.
So your statement "You place the stop where it needs to be" does not play any role in this particular situation, but it is very important to keep in mind when the code is tightly coupled.