Lot calculation based on risk and leverage

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 Hello to all,

I have a rather basic question to ask... I know that to calculate the position size you have to use the formula: Lots= Risk Capital/( Stop Loss * Pip Value) or Pip Value = (1 pip * Lot size)/ exchange rate. In view of these two formulas, I wonder first of all in relation to the risk capital, in which currency should it be expressed? the one of the account? or the one of the traded currency? 
Furthermore, being a beginner, I would like to put a very small amount on my account such as 100 USD to place my first order... I have heard that I can go up to 1:30 leverage with most brokers, does this impact my Lot calculation? What size lots should I take with a small capital in my pip value calculation formula? Do you have an example of calculation so that I can understand better? 
I know there are sites that automatically calculate these positions without all these questions... But I really need to understand...


Thank you in advance for your answers :-D

Have a nice day 

Translated with www.DeepL.com/Translator (free version)
 
You have margin and profit currency per symbol. (See symbol details).

Your calculations are always based on these currencies.

If your account currency deviates from these, you need to consider the exchange rates between either profit currency or margin currency to your account currency.

Leverage is a factor used to calculate the required security deposit (margin) for "renting" the contract size. One contract size is 1.00 lot.

So if you have 100$ and your contract size is 100.000$ and your leverage is 1:100, the maximum lot size will be 0.1 Lot.

This will use all your account deposit and therefore will perform a margin call/stop out.

You need to take into account your stop out level given by your broker as well as the amount of "cost" for opening a position (either spread or commission). Also you need equity available for an eventual draw down, imposed by your open position.

Hope this brings clarification.
 
Dominik Egert #:
You have margin and profit currency per symbol. (See symbol details).

Your calculations are always based on these currencies.

If your account currency deviates from these, you need to consider the exchange rates between either profit currency or margin currency to your account currency.

Leverage is a factor used to calculate the required security deposit (margin) for "renting" the contract size. One contract size is 1.00 lot.

So if you have 100$ and your contract size is 100.000$ and your leverage is 1:100, the maximum lot size will be 0.1 Lot.

This will use all your account deposit and therefore will perform a margin call/stop out.

You need to take into account your stop out level given by your broker as well as the amount of "cost" for opening a position (either spread or commission). Also you need equity available for an eventual draw down, imposed by your open position.

Hope this brings clarification.

Hello Mr Egert,


Thank you very much for your reply. After a lot of tests on a demo account, I finally understood how a lot is calculated, thank you very much.


Good day to you. 

 
Make life easier for yourself by using the online tool

 
Hugo Tram: Lots= Risk Capital/( Stop Loss * Pip Value

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% account 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.

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