#405: How Much to Risk per Trade and How to Calculate that Risk?

How Much to Risk per Trade and How to Calculate that Risk?  Podcast: #405: How Much to Risk per Trade and How to Calculate that Risk? In this video: 00:29 – Email from a podcast listener 00:59 – How do you calculate your risk amount 01:20 – Download my MT4/MT5 Lot Size Calculator  01:55 – The logic behind lot sizing</span 02:38 – Lot size examples 04:58 – How to use the Lot Size Calculator trading script 05:27 – Know the stop loss size of your trade to calculate your lot size needed 06:29 – Email me any topics you’d like me to discuss on future videos and podcasts How much should you risk per trade? And also how do you calculate that risk? Let's talk about that and more right now. Hi Forex traders, it is Andrew Mitchem here at The Forex Trading Coach with video and podcast number 405. Email from a podcast listener I've received an email this week from a trader called Diop, and Diop by the way you said you've started listening to all my podcasts and you're currently up to number 202. You're about half way; this is number 405. So well done for listening through to those. You said you're really enjoying them and you understand the concept of... You said you've been looking online and you should risk somewhere between 1-5% of your account per trade. You also know that in my case I suggest that's still way too high, and you should actually be half of that. You should actually be half of 1% risk per trade. How do you calculate your risk amount But your question is how do you calculate that and what do you do with your trading in order to make that happen? And to ensure that you have controlled risk but also some of those bigger stop-loss trades aren't going to wipe out your gains. I can see where you're coming from, but also I think there's a slight misunderstanding there. Download my MT4/MT5 Lot Size Calculator  I've given you the very quick answer, the quick answer is to download my lot size calculator. It works on MT4 and MT5 and I will put a link on this video and podcast post so you can get a free copy. Of course, that applies to anybody who would like a free copy of that. It's really, really easy and it takes you about five seconds to do. All you do with it is you drag it onto your chart, you put the stop-loss of the trade that you're wishing to take, literally just type it in and press okay and it will tell you the lot size that you need for that trade. The logic behind lot sizing So the thing that you need to understand from a manual point of view, to understand the workings behind that, is that you have to understand that different currency pairs pay a different amount per pip depending on what the currency pair is and also what your own account denomination is. So Diop I notice you're talking about your account being in pounds. So your account in British Pounds, let's say with £100.00 would obviously be very, very different to my account with $100.00 New Zealand Dollars, or someone with $100.00 US Dollars. So it's the account denomination that is affected plus it's each individual currency pair that has different amounts per pip. Lot size examples But, for the sake of this, let's say very easy round numbers. Let's say we have a US Dollar account and we're trading the Pound/US or the Euro/US. Notice that the US is second there in each of those currencies. If you're trading one standard lot, that's 1.0 lots, that pays $10.00 per pip. If you are trading a mini lot, that is 0.1 lots, that pays $1.00 per pip. If you are trading a micro lot, that is 0.01 lots, that pays $0.10 per pip. Now let's say for example,