Space Wars

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MightyOne
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Postby MightyOne » Sat Jan 08, 2011 7:46 am

PebbleTrader wrote:Where does 0.09 come from in:
X% = LeverageUSD * 0.09

0.09?


9% of leverage is what I feel is best for this strategy.

My largest initial position size is 20% of leverage.

I am willing to risk 4.5% per trade if my LeverageUSD (units/margin) is 50:1.
Right now the EURGBP has a LeverageUSD of 38:1 and my risk per trade would be 3.4%

Do what you feel works best for you after you paper trade it awhile.

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Jalarupa
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Postby Jalarupa » Sat Jan 08, 2011 10:11 am

MightyOne wrote:
PebbleTrader wrote:Where does 0.09 come from in:
X% = LeverageUSD * 0.09

0.09?


Right now the EURGBP has a LeverageUSD of 38:1 and my risk per trade would be 3.4%

Do what you feel works best for you after you paper trade it awhile.


Hey MO,

does your broker give you this info? where can we get this info from or does it involve some calculation on your part?

thx

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MightyOne
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Postby MightyOne » Sat Jan 08, 2011 11:00 am

Jalarupa wrote:
MightyOne wrote:
PebbleTrader wrote:Where does 0.09 come from in:
X% = LeverageUSD * 0.09

0.09?


Right now the EURGBP has a LeverageUSD of 38:1 and my risk per trade would be 3.4%

Do what you feel works best for you after you paper trade it awhile.


Hey MO,

does your broker give you this info? where can we get this info from or does it involve some calculation on your part?

thx


Account is in USD<---home currency

base currency--->EUR/GBP

Base/Home = EUR/USD

Current price of EUR/USD is 1.2906

(Price * Units) / LeverageOffered = Margin

(1.2906 * 10,000) / 50 = $258.12

Units / Margin = LeverageUSD

10,000 / 258.12 = 38.7

LeverageUSD for EURGBP = 38:1

If the base currency is USD then leverage = LeverageOffered

-But what if the pair is CAD/CHF, there is no CADUSD!

To flip the USDCAD you divide 1 by the price of USDCAD:

1 / 0.9922 = 1.007

(1.007 * 10,000) / 50 = $201.57

10,000 / $201.57 = 49.6

LeverageUSD for CADCHF is 49:1

PS: that is what D6 is for in my sheet; enter the price of the BASE/HOME and it will tell you what the LeverageUSD is in D4.

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Postby MightyOne » Sat Jan 08, 2011 11:13 am

If it is still not clear:

Even though the leverage offered by your broker is 50:1

a LeverageUSD of 38:1 means that you will cap out at 38 micro if you have a $1,000 account.

So if you sized your initial position based on 50:1 leverage then you have made a huge mistake.

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Jalarupa
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Postby Jalarupa » Sat Jan 08, 2011 12:48 pm

Great advice!

Thank you for clearing it up ;-)
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Postby PebbleTrader » Sat Jan 08, 2011 2:35 pm

Yes, thanks for the EXCELLENT explanations.

Space Wars is all I have thought about all week long!

:D
Life is just a journey

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Postby PebbleTrader » Sat Jan 08, 2011 2:41 pm

"High Water Mark" is a pretty interesting idea.

Mathematically it always intrigued me how a "x% loss" and then a "x% gain" does not get you back to breakeven.
Last edited by PebbleTrader on Sat Jan 08, 2011 4:02 pm, edited 1 time in total.
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Postby aliassmith » Sat Jan 08, 2011 3:55 pm

MightyOne wrote:
Jalarupa wrote:
MightyOne wrote:
PebbleTrader wrote:Where does 0.09 come from in:
X% = LeverageUSD * 0.09

0.09?


Right now the EURGBP has a LeverageUSD of 38:1 and my risk per trade would be 3.4%

Do what you feel works best for you after you paper trade it awhile.


Hey MO,

does your broker give you this info? where can we get this info from or does it involve some calculation on your part?

thx


Account is in USD<---home currency

base currency--->EUR/GBP

Base/Home = EUR/USD

Current price of EUR/USD is 1.2906

(Price * Units) / LeverageOffered = Margin

(1.2906 * 10,000) / 50 = $258.12

Units / Margin = LeverageUSD

10,000 / 258.12 = 38.7

LeverageUSD for EURGBP = 38:1

If the base currency is USD then leverage = LeverageOffered

-But what if the pair is CAD/CHF, there is no CADUSD!

To flip the USDCAD you divide 1 by the price of USDCAD:

1 / 0.9922 = 1.007

(1.007 * 10,000) / 50 = $201.57

10,000 / $201.57 = 49.6

LeverageUSD for CADCHF is 49:1

PS: that is what D6 is for in my sheet; enter the price of the BASE/HOME and it will tell you what the LeverageUSD is in D4.


I see what you are doing. I always thought when you set a risk level
it would be as simple as:

Account size * risk% = Dollars at Risk
Dollars at Risk/Number of Pips of space = $/pip

$100,000 * 2% = $2000
$2000/100pips = $20/pip
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PebbleTrader
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Postby PebbleTrader » Sat Jan 08, 2011 4:00 pm

MO,

I am working on the "suggestion"

I should have it done by the end of the weekend.

Enjoy the weekend friends
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Postby aliassmith » Sat Jan 08, 2011 4:04 pm

You control when you are in/out of the market, lots size, and space.

Remember that an adjustment sets your position on a ret; your first entry sets your position in the market at the 100% ret (max risk).

[highlight=red]You can move your position out of harms way by shedding lots:[/highlight]

(7/5) * space = 40% more space = a position further away from the current price.[/quote]

I have been doing something similar to this. I put on a position then after
it moves some I take lots off the table. When it creates points for new
entries I add in.
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