Basic money management and Forex

[creation123]

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.

[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.

[Chunnel]

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..

[pro_atro]

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.