HELP with min lot size

Scavyn Inc  

Hi all,

I have a quick question regarding min lot size calculations. Now lets say I have $100,000 in my account and I am trading EURUSD, my risk is 2% and max loss in Pips is 20 pips. All of the calculations gives me 10 lots to trade, which makes sense from a pip value point of view. 1 Standard lot is almost $10, so 10 lots is $100 * 20 Pips (max loss in pips) = $2000 which is equal to 2% of $100,000 (my balance). Now what doesn't make sense is 10 standard lots  = 1,000,000 units to trade and my account has only $100,000 which is equivalent to $100,000.

Leverage is 50:1 btw! (which I dont think matters in these calculations)

I would like to understand how can I trade 10 lots and I have less that in the account, even though it makes sense from value pip point of view.


Thank you all!

Amos Tsopotsa  
omarmostafa125:

Hi all,

I have a quick question regarding min lot size calculations. Now lets say I have $100,000 in my account and I am trading EURUSD, my risk is 2% and max loss in Pips is 20 pips. All of the calculations gives me 10 lots to trade, which makes sense from a pip value point of view. 1 Standard lot is almost $10, so 10 lots is $100 * 20 Pips (max loss in pips) = $2000 which is equal to 2% of $100,000 (my balance). Now what doesn't make sense is 10 standard lots  = 1,000,000 units to trade and my account has only $100,000 which is equivalent to $100,000.

Leverage is 50:1 btw! (which I dont think matters in these calculations)

I would like to understand how can I trade 10 lots and I have less that in the account, even though it makes sense from value pip point of view.


Thank you all!

if i have 100 dollars in my trading account  can i take a 10 lot and get it executed the answer is NO worse off your leverage you are using it wont work and it doesnt work 

William Roeder  
omarmostafa125: I would like to understand how can I trade 10 lots and I have less that in the account,

That is what leverage allows.

William Roeder  
omarmostafa125 #: But leverage is not part of calculation at all, can you please explain more? @William Roeder

What part of "that is what leverage allows" was unclear? You have leverage and risk. It's like having a 150 MPH engine and a 70 MPH speed limit.

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 (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.

  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.

Scavyn Inc  

I dont think we are talking about the same thing, so let me rephrase my question again. According to this calculator here; https://www.cashbackforex.com/tools/position-size-calculator and the screenshot attached with my values. I am getting that I can trade with 10 Lots, even though my account has 100,000. I havent entered any values for leverage at all, so I dont think its taken into considerations here.

What am I missing?

Lot Size Calculator
  • www.cashbackforex.com
Lot size and position size risk calculator to calculate the recommended units or lot size to risk, using live market quotes, account equity, risk percentage and stop loss.
Fernando Carreiro  
omarmostafa125 #: I dont think we are talking about the same thing, so let me rephrase my question again. According to this calculator here; https://www.cashbackforex.com/tools/position-size-calculator and the screenshot attached with my values. I am getting that I can trade with 10 Lots, even though my account has 100,000. I havent entered any values for leverage at all, so I dont think its taken into considerations here. What am I missing?

Leverage is like a "loan" from the bank. When you buy 1 lot of EUR/USD, you would need to a buy it with 100000 EUR (or the equivalent in USD). This is equivalent to a leverage of 1:1 or no leverage at all.

Leverage allows you to only put in a small percentage of that, called Margin. Once you close your position, you would get back that initial payment of 100000 EUR plus the profit or less the loss. The same applies to your margin. You get it back after the position is closed.

However, this margin does not factor into the calculation of the risk of the stop-loss as William has explained. The margin is like a security deposit that you would pay when you go to a car-rental, and you get it back when you return the car.

So, when you buy a certain volume for a trade, you would first calculate how much volume would be needed to limit the risk of the stop-loss, and the you would see if that volume is acceptable based on the margin requirements of the leverage for the account or symbol.

In MQL5 you would use the OrderCalcProfit function to calculate the volume based on risk, and then you would use OrderCalcMargin to calculate the volume based on margin requirements. You would then use the smaller of the two values, to make sure that your risk AND your margin requirements are met.

kibotheking  
omarmostafa125 #:

I dont think we are talking about the same thing, so let me rephrase my question again. According to this calculator here; https://www.cashbackforex.com/tools/position-size-calculator and the screenshot attached with my values. I am getting that I can trade with 10 Lots, even though my account has 100,000. I havent entered any values for leverage at all, so I dont think its taken into considerations here.

What am I missing?


You're assuming that the calculator has a default leverage of 1:1 and saying that you CAN trade 10 lots with $100,000. Both assumptions are wrong. 

The calculator doesn't tell you if you can or can't. It only calculates the accurate lot size for whatever scenario you throw at it. You will have to calculate the required leverage yourself, which in your case is 1:10.
Ba Lam Cao  

Make leverage 1:100 or more. You can open position 10lot

Reason: