Basic money management and Forex

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I did study a lot of way to analyze the market but as I am still paper trading results, I really wanted to ask a basic question with money and risk management.

So I'd like to use a concrete example to make it more understandable.

- Let's say I deposit 10.000 $ on my forex account

- In my money management rule, I know I can risk 2%

- so I can risk 200 $

- I don't use leverage so I stay 1:1

- I see a nice buy setup on the Eur/Usd. I know where to enter

- so I know I can't risk (loose) more than 200 $ on that trade.

So my question is where do I have to place my stop loss in order to make sure that I won't loose more than 200 $ ? Is there a rule or a calculus to determine quickly that stop level ?

Once again I realize it is a very basic question but it would really help me a lot to get an answer.

 

Hi,

This will highly depend on your position size.

If you are trading mini lots then your pip value is $1 per pip, so therefore a $200 risk level would be 200 pips from your entry.

If you are trading standard lots then your pip value is $10 per pip, so therefore a $200 risk level would only be 20 pips from your entry.

 
PipperySlipples:
Hi,This will highly depend on your position size.If you are trading mini lots then your pip value is $1 per pip, so therefore a $200 risk level would be 200 pips from your entry.If you are trading standard lots then your pip value is $10 per pip, so therefore a $200 risk level would only be 20 pips from your entry.

Great anwser!

But trading with a standard lot is allot if you only want to risk 20 pip..

 

Discipline is probably one of the most overused words in forex trading education. However despite the cliche, discipline continue to be the most important behavior one can master to become a profitable trader.

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