Yes, we offer math help for free, but it is the volunteer tutors and other members who get to decide what form that help takes.
Thanks for your understanding and cooperation. Welcome to the boards. :cool:
Hey dude thanks for explaining things out. I'm just a basement boy paper trading at the moment. Math use to be my favorite subject at school but over time I guess my skills have diminished. For some reason I don't know why I can't create this simple equation with three variable. If I remove either one, I could formulate it but piling on three seem to freeze my brain.
I'll walk you through some definitions before moving ahead.
- Position Sizing: It is the amount of money that one would invest into a single trade.
- Trading Account: It is the total amount of money deposited with a financial institution or broker for the purpose of trading.
- Maximum Loss Per Trade: It is the maximum amount of money that one would lose on a single trade with respect to their trading account.
- Stop Loss: It is an order which would get triggered automatically, once the stock/currency reaches a certain price.
1) Trading account is like our bank balance.
2) Maximum loss on a single trade would either be 0.6%, 0.8% or on an extreme case 2% of the trading account.
3) Stop Loss is tricky as it can vary anywhere between 2% to 20% based on how volatile the market is.
I want to figure out how much money I need to place into a single trade having known my trading account (X), max loss per trade (Y%) and stop loss (Z%).
Here is what I've got so far.
* Trading account (X)/ Max loss per trade (Y%) = Total number of losing trading.
eg: trading account of $1000/ Max loss per trade (0.6%), is $1000/$6 = 166.67 or ~ 167 total number of losing trader to blow up my account.
* 100%/Stop loss Z% = 'A' where A is the times of my position size.
eg 100%/8% = 12.5 x Stop loss amount will be my position size.
Position size = ?
Thanks again for taking the time and effort for replying back to me. Do let me know on this thread or PM how I could contribute back to you or this forum in any small way. Cheers