MightyOne wrote:Accounts in USD:
Units / Margin = Leverage
EU = (100,000 / 2670) = 37:1
(Leverage / 10) * 0.9 = TradeRisk
3.7 * 0.9 = 3.33% TradeRisk
Default initial position size is 20% of max leverage (37:1) which is 3.33% spread over 45 pips.
I do NOT recommend an initial position size greater than 20% of leverage.
Need more pips?
$1,000 account, $33.30 risk, 7 micro lot initial position size.
The volatility may have increased and you decide that you need 60 pips in cushion to comfortably sit through a wick until there is a close above/below your line.
All you do is take your default size of 7 micro and divide it by your new size of 5 micro and you get 1.4. Multiply this number by 45 and you get 63 pips.
So 5 micro over 63 pips is ~ 3.33% Risk.
Need fewer pips?
Aggressive you decide that you need only 20 pips...
so you increase your position size from the default of 7 to the new lot size of 15 and you get (7/15) * 45 = 20.9 pips.
On my charts I use this notation:
No T: If price touches this line then you are screwed...and not in a good way.
7/7: No adjustments have been made, starting size is 7 lots.
7/8: increased from 7 lots to 8.
8/5: decreased from 8 lots to 5
5/0: Liquidated 5 lots.
We have a 63 pip pincushion, price moves 20 pips in our favor, and we feel that we can move our MSL down 20 pips or so to a resistance level. 63/83 is 75.9% and the closest we can get with our 5 lots is 5/7 for 71.4% or 83 * 0.714 = 59 for a 24p reduction of our pincushion. After we purchase 2 more lots, we have 7 lots and a 59 pip pincushion.
I consider my "No Touch (No T)" to be my entry and the pincushion to be a defensive moat.
The greater the number of lots I have to work with the more I control over my defenses.
Using profit from smaller charts:
At times I might start with 10/10 on the hourly and catch 100 pips at 10/15. I then dilute the strength like this 15/10 and I have 150 pips to work with.
Next trade I might fade an illusion BO with 10/20 and a 75p pincushion. If I catch 40 pips then I can dilute again like so 20/10 and have 230 pips to work with.
I may want to move to the weekly chart with 10/7 & 328 pips.
I discovered a major flaw in my approach with starting off too big... It means that you can't go big later on... So no more high leverage scalps only normal leveraged scalps...
Lesson learned... Back to the drawing board...