Maths Calculations for Stop Loss

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Good morning forum,

I'm having a bit of a fuzzy-Monday brain today; hoping somebody can help me with this calculation please.

My account is GBP, I'm trading GBP/USD (0.01 lot size) and my leverage is 100:1. If I have a 100,000 GBP account and want to risk 5% per trade, that means my stop loss will need to be somewhere so if it is hit I will lose 5,000 GBP. How do I calculate how many pips this stop loss will be away from the current price, given the above information?

Kind regards,
Callum.

 
CPerry:

Good morning forum,

I'm having a bit of a fuzzy-Monday brain today; hoping somebody can help me with this calculation please.

My account is GBP, I'm trading GBP/USD (0.01 lot size) and my leverage is 100:1. If I have a 100,000 GBP account and want to risk 5% per trade, that means my stop loss will need to be somewhere so if it is hit I will lose 5,000 GBP. How do I calculate how many pips this stop loss will be away from the current price, given the above information?

Kind regards,
Callum.

Just to clarify, 1 lot = 10 GBP, right? So 0.01 = 10p per pip? I'm just a bit confused (reason for this post) as I've watched some YouTube videos and this guy was talking about it depending on leverage, base currency, and other factors so thought I'd chance looking stupid and ask away in order to make sure my knowledge is correct. Anyways, at the risk of looking dumb, my question still stands.

 
CPerry: ow do I calculate how many pips this stop loss will be away from the current price, given the above information?

Risk depends on your initial stop loss, lot size, and the value of the symbol. It does not depend on margin or leverage. No SL means you have infinite risk (on leveraged symbols). Never risk more than a small percentage of your trading funds, certainly less than 2% per trade, 6% total.

  1. You place the stop where it needs to be — where the reason for the trade is no longer valid. E.g. trading a support bounce, the stop goes below the support. Then you compute your lot size.

  2. AccountBalance * percent/100 = RISK = OrderLots * (|OrderOpenPrice - OrderStopLoss| * DeltaPerLot + CommissionPerLot) (Note OOP-OSL includes the spread, and DeltaPerLot is usually around $10/PIP, but it takes account of the exchange rates of the pair vs. your account currency.)

  3. Do NOT use TickValue by itself - DeltaPerLot and verify that MODE_TICKVALUE is returning a value in your deposit currency, as promised by the documentation, or whether it is returning a value in the instrument's base currency.
              MODE_TICKVALUE is not reliable on non-fx instruments with many brokers - MQL4 programming forum (2017)
              Is there an universal solution for Tick value? - Currency Pairs - General - MQL5 programming forum (2018)
              Lot value calculation off by a factor of 100 - MQL5 programming forum (2019)

  4. You must normalize lots properly and check against min and max.

  5. You must also check Free Margin to avoid stop out

  6. For MT5, see 'Money Fixed Risk' - MQL5 Code Base (2017)

Most pairs are worth about $10 per PIP. A $5 risk with a (very small) 5 PIP SL is $5/$10/5 or 0.1 Lots maximum.

 
CPerry:

Good morning forum,

I'm having a bit of a fuzzy-Monday brain today; hoping somebody can help me with this calculation please.

My account is GBP, I'm trading GBP/USD (0.01 lot size) and my leverage is 100:1. If I have a 100,000 GBP account and want to risk 5% per trade, that means my stop loss will need to be somewhere so if it is hit I will lose 5,000 GBP. How do I calculate how many pips this stop loss will be away from the current price, given the above information?

Kind regards,
Callum.

You can do 2 things to achieve a set % loss when sl is hit.

Widen the stop loss distance from the open price and have a lower lot , or , shrink the distance and increase the lot .

This allows you to be flexible for placing your stops based on your analysis.

Try this tool (although it does not account for the stop limit level)

You enter the direction , the SL price , the Risk % and it gives you the lot size.

 
Hi there how do i calculate lot size maximum to use if i have 10usd in my account?
 
Wanald #:
Hi there how do i calculate lot size maximum to use if i have 10usd in my account?
10 USD is insufficient for a standard account. You will need a microlot account with a leverage of at least 1:50 to be able to cover your margin requirements. And your stop out value needs to be below 50% margin, or below half your equity balance.

So to be able to trade and also withstand a drawdown, you would at least need a leverage of 1:100, just to have some equity left for your trade.

Then, use the calculations provided above to calculate your volume, based on your stop loss.
 
William Roeder #:

Risk depends on your initial stop loss, lot size, and the value of the symbol. It does not depend on margin or leverage. No SL means you have infinite risk (on leveraged symbols). Never risk more than a small percentage of your trading funds, certainly less than 2% per trade, 6% total.

  1. You place the stop where it needs to be — where the reason for the trade is no longer valid. E.g. trading a support bounce, the stop goes below the support. Then you compute your lot size.

  2. AccountBalance * percent/100 = RISK = OrderLots * (|OrderOpenPrice - OrderStopLoss| * DeltaPerLot + CommissionPerLot) (Note OOP-OSL includes the spread, and DeltaPerLot is usually around $10/PIP, but it takes account of the exchange rates of the pair vs. your account currency.)

  3. Do NOT use TickValue by itself - DeltaPerLot and verify that MODE_TICKVALUE is returning a value in your deposit currency, as promised by the documentation, or whether it is returning a value in the instrument's base currency.
              MODE_TICKVALUE is not reliable on non-fx instruments with many brokers - MQL4 programming forum (2017)
              Is there an universal solution for Tick value? - Currency Pairs - General - MQL5 programming forum (2018)
              Lot value calculation off by a factor of 100 - MQL5 programming forum (2019)

  4. You must normalize lots properly and check against min and max.

  5. You must also check Free Margin to avoid stop out

  6. For MT5, see 'Money Fixed Risk' - MQL5 Code Base (2017)

Most pairs are worth about $10 per PIP. A $5 risk with a (very small) 5 PIP SL is $5/$10/5 or 0.1 Lots maximum.

Thank you for clearing that up and giving such a detailed response, much appreciated!

 
Lorentzos Roussos #:

You can do 2 things to achieve a set % loss when sl is hit.

Widen the stop loss distance from the open price and have a lower lot , or , shrink the distance and increase the lot .

This allows you to be flexible for placing your stops based on your analysis.

Try this tool (although it does not account for the stop limit level)

You enter the direction , the SL price , the Risk % and it gives you the lot size.

Brilliant, thank you!

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