admin
12-16-2016, 10:58 AM
Hello,
You are on some chart in your Metatrader trading platform. And you do not know how much money it will cost you to open trade, how much is one point/pip worth and how many $ you need to cover losses if the price is on certain level..
How to discover spread
To discover spread (difference in BUY and SELL price), click "New Order" and count how many points is spread BUY value minus SELL value. Make sure you selected correct trading pair.
252
Discover important data about chart (€/$ per 1 tick/pip, SWAP..)
On the left of the Metatrader should be section entitled "Market Watch" with various currency pairs, mouse right click on the pair and select "Specification" as seen on the image above.
This is Specification window:
253
The "Contract size" is 1
The "Tick value" is 0.05
The "Minimal volume" is 10.00
From these data i can discover following:
€/$ worth of one point on the chart (tick/pip)
So i think it mean that one tick / one point on the chart is worth $0.05 (or €?)
BUT in my case i am not allowed to BUY/SELL just 1 Contract, but minimum 10, defined by "Minimal volume". So in my case the Tick value/one pip $ value will be 10x higher ($0.05 x 10 = $0.50). So each smallest point change on the chart is worth $0.50 i assume.
€/$ worth of the spread when order is placed
The spread is 15 (we calculated on the first image above) so when i place an order i will be loosing 15 ticks/points : 15 x $0.50 = $7.5.
Each price point/pip(?) will add or remove $0.5, that is quite alot of money when trading on small account.
€/$ worth of the worst scenario price (Stop loss position)
How much money i will be in loss if the price goes against me from order BUY price 130.00 to the price 110.00 ? How much i will be loosing in open trade at price is 110.00? I do not know exactly but i assume when i compare both numbers without decimal points, with all zeros i get this: 13000-11000=2000. I assume i got 2000 price points which i need to multiply by the worth of one tick i calculated earlier ($0.50): 2000x$0.50=$1000. So this price move from 130.00 to 110.00 will make my trade be:
-$7.5 (loss caused by spread as we calculated earlier)
-$1000.00 (open trade holding this loss)
-------------
-$1007.50
(i have not included a) any comissions imposed on some trading accounts by broker (round turn lot comission) and b) i have not calculated SWAP if there is any)
Calculating SWAP charges/bonuses
If chart "Specification" window (second image in this post) shows long(buy)/short(sell) SWAPs, then i need to include SWAP charges/bonuses in my calculation. I need to estimate how many days (incl. weekends) it can take to complete the trade (go from negative balance to the take profit moment). close the position. What if trade will be open 365 days? In case i am in BUY(long) position where SWAP is example -5.00, and i am trading "Minimal volume" (0.01 lot for example), then i move decimal point of the number "-5.00" two spaces left resulting in -0.0500 USD loss per days (weekends not excluding). 365 days long trade will result in SWAP comissions of: 365x$0.05=$18.25
So how much i need to have in my balance to survive mentioned trade? Probably SWAP charges (if applicable as mentioned in previous paragraph) + calculated worst scenario price (-$1007.50). And some reserve, maybe +100% and then monitor "Margin level" percentage in Metatrader so it is maybe 200% ?
€/$ worth of the round turn lot comissions imposed by the broker
not yet written, anyone knows?
------
What do You think?
PS: information on this page is not an advice, the information might be wrongly calculated.
You are on some chart in your Metatrader trading platform. And you do not know how much money it will cost you to open trade, how much is one point/pip worth and how many $ you need to cover losses if the price is on certain level..
How to discover spread
To discover spread (difference in BUY and SELL price), click "New Order" and count how many points is spread BUY value minus SELL value. Make sure you selected correct trading pair.
252
Discover important data about chart (€/$ per 1 tick/pip, SWAP..)
On the left of the Metatrader should be section entitled "Market Watch" with various currency pairs, mouse right click on the pair and select "Specification" as seen on the image above.
This is Specification window:
253
The "Contract size" is 1
The "Tick value" is 0.05
The "Minimal volume" is 10.00
From these data i can discover following:
€/$ worth of one point on the chart (tick/pip)
So i think it mean that one tick / one point on the chart is worth $0.05 (or €?)
BUT in my case i am not allowed to BUY/SELL just 1 Contract, but minimum 10, defined by "Minimal volume". So in my case the Tick value/one pip $ value will be 10x higher ($0.05 x 10 = $0.50). So each smallest point change on the chart is worth $0.50 i assume.
€/$ worth of the spread when order is placed
The spread is 15 (we calculated on the first image above) so when i place an order i will be loosing 15 ticks/points : 15 x $0.50 = $7.5.
Each price point/pip(?) will add or remove $0.5, that is quite alot of money when trading on small account.
€/$ worth of the worst scenario price (Stop loss position)
How much money i will be in loss if the price goes against me from order BUY price 130.00 to the price 110.00 ? How much i will be loosing in open trade at price is 110.00? I do not know exactly but i assume when i compare both numbers without decimal points, with all zeros i get this: 13000-11000=2000. I assume i got 2000 price points which i need to multiply by the worth of one tick i calculated earlier ($0.50): 2000x$0.50=$1000. So this price move from 130.00 to 110.00 will make my trade be:
-$7.5 (loss caused by spread as we calculated earlier)
-$1000.00 (open trade holding this loss)
-------------
-$1007.50
(i have not included a) any comissions imposed on some trading accounts by broker (round turn lot comission) and b) i have not calculated SWAP if there is any)
Calculating SWAP charges/bonuses
If chart "Specification" window (second image in this post) shows long(buy)/short(sell) SWAPs, then i need to include SWAP charges/bonuses in my calculation. I need to estimate how many days (incl. weekends) it can take to complete the trade (go from negative balance to the take profit moment). close the position. What if trade will be open 365 days? In case i am in BUY(long) position where SWAP is example -5.00, and i am trading "Minimal volume" (0.01 lot for example), then i move decimal point of the number "-5.00" two spaces left resulting in -0.0500 USD loss per days (weekends not excluding). 365 days long trade will result in SWAP comissions of: 365x$0.05=$18.25
So how much i need to have in my balance to survive mentioned trade? Probably SWAP charges (if applicable as mentioned in previous paragraph) + calculated worst scenario price (-$1007.50). And some reserve, maybe +100% and then monitor "Margin level" percentage in Metatrader so it is maybe 200% ?
€/$ worth of the round turn lot comissions imposed by the broker
not yet written, anyone knows?
------
What do You think?
PS: information on this page is not an advice, the information might be wrongly calculated.