Lot size based on percentage of balance

[tnil25]

What would be the best way to go about calculating your lot size based on a percentage of your account?

Lets say for example the balance is $1000 and you want to put 10% of the account into an order. 10% of 1000 = 100, so we would need to convert that to a lot size, or the nearest lot size.

Any thoughts? I saw examples for calculating lot size based on risk + stop loss but the EA I'm developing employs a break even stop loss only.

[Dominik Egert]

A break even SL is either impossible or based on a bailout strategy.

Whatever, if you do not have a (negative) SL, your Lotsize is theoretically unlimited.

So you need to take Margin as your volume limit.

[tnil25]

Dominik Egert:

A break even SL is either impossible or based on a bailout strategy.

Whatever, if you do not have a (negative) SL, your Lotsize is theoretically unlimited.

So you need to take Margin as your volume limit.

Hi Dominik,

The break even SL is activated when the position moves in a profitable direction. Otherwise the position is closed when a condition is met.

Can you give me some direction on how to use Margin as the limit?

[William Roeder]

tnil25: 10% of 1000 = 100, so we would need to convert that to a lot size,

Risk depends on your initial stop loss, lot size, and the value of the symbol. It does not depend on margin and leverage. No SL means you have infinite risk. 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 You place the stop where it needs to be — where the reason for the trade is no longer valid.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.

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 2017.10.10
             Is there an universal solution for Tick value? - Currency Pairs - General - MQL5 programming forum 2018.02.11
             Lot value calculation off by a factor of 100 - MQL5 programming forum 2019.07.19

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

5. You must also check FreeMargin to avoid stop out

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.

[Dominik Egert]

tnil25:

Hi Dominik,

The break even SL is activated when the position moves in a profitable direction. Otherwise the position is closed when a condition is met.

Can you give me some direction on how to use Margin as the limit?

As William said, its Margin is only a tertiary rissk aspect. 

Volume in the Market needs to be backed by a security deposit, called margin. This reduces the amount of available equity to your trade. - If your trade has no risk (impossible), your theoretical volume based on risk is infinite. So the maximum supported security deposit (called margin) is your limit.

A Volume is backed by such margin, so the question is how much margin can you afford to "use" from your equity as security deposit. 

Limits are specified by leverage, contract size, stop out level and balance/equity.

I think i got it right, but here is a post, that might shed some light on your margin-question.

https://www.mql5.com/en/forum/368609#comment_22226694

[tnil25]

Dominik Egert:

As William said, its Margin is only a tertiary rissk aspect. 

Volume in the Market needs to be backed by a security deposit, called margin. This reduces the amount of available equity to your trade. - If your trade has no risk (impossible), your theoretical volume based on risk is infinite. So the maximum supported security deposit (called margin) is your limit.

A Volume is backed by such margin, so the question is how much margin can you afford to "use" from your equity as security deposit. 

Limits are specified by leverage, contract size, stop out level and balance/equity.

I think i got it right, but here is a post, that might shed some light on your margin-question.

https://www.mql5.com/en/forum/368609#comment_22226694

Thanks for the info, will read up on it. I decided to go ahead an implement a stop loss based risk and its been working out fairly well. Thanks again!