Calculating stop loss from known values

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Beau Mcguigan
17
Beau Mcguigan  

Hi all,

Sorry for the probably terrible title, end of the day couldn't think of anything better.

I'm in the process of setting up a spreadsheet and need a calculation for the stop loss (in points).  The information I have is the $ per point, Ask Price, Risk % (%3 of equity in this case), trade volume and spread.  Example data below;

$ Per Point  0.76644
Ask Price  1.30452
3% Risk  299.94
Volume  0.02
Spread  23


Based on this information, I need to get, in points, a stop loss value which is ~$299 in loss value higher/lower than the ask price.


I thought I could get this to work using the following;

Points = ( [3% Risk] / [Volume] ) * [$ Per Point]

Stop Loss = [Ask Price] + ( Points * 0.00001)

However this only seems to work where the $ Per Point is > 1.


I didn't think this would be terribly difficult until I started attempting it, no matter what I try I cannot seem to come up with the correct numbers.  It's probably something really simple but anyone with an idea please let me know.

Marco vd Heijden
Moderator
8422
Marco vd Heijden  

Hello you can use Tickvalue in the base currency but you did not specify any language.

If it's MQL4 then

int SL=100; 

double stoploss=Ask+SL*_Point; 
Beau Mcguigan
17
Beau Mcguigan  

Hi Marco,

This was in a spreadsheet, not in MQL4 or 5.  The whole idea is that the stop loss is unknown until it is calculated, so the above wouldn't work.

Anthony Garot
1945
Anthony Garot  

Points = ( [3% Risk] / [Volume] ) * [$ Per Point]

Stop Loss = [Ask Price] + ( Points * 0.00001)


First let me say that I have a number of different ways to calculate SL, none of which include volume. That's something I've never come across before.

I usually figure SL first based upon something like ATR, FIXED, price percent, high/low of last N bars, etc.

Now that I have a SL, I determine the lotSize. It's only at that point that I consider a Risk % — and that's based upon equity.

So, if I have $10,000, then 3% of that is $300. But if my equity increases to $11,000, then 3% is now $330.

So, on a long-term trend following system, I might have a SL of something like 2xATR(20). Then I figure the lotSize based upon that, my equity, and my max risk percent.

Beau Mcguigan
17
Beau Mcguigan  
It just made sense to me that your stop loss value is going to change depending on the lot size, buying in a lot 1 is going to need a lower value stop than buying in at 0.1 if you want to maintain a 3% risk margin.  I ended up figuring it out anyway, had the point calculation quite wrong, and didn't realise I'd have to change it slightly for different markets.  End result works really well though.
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