holysh!t, the biggest fluctuation in forex's history?

Go long on gold now guys. Fundamental is back for gold.

Hi guys,

Am doing some reading in babypips on position size. I don't quite understand the following bold and underlined area:

Ever since he blew out his first account, he has now sworn that he doesn’t want to risk more than 1% of his account per trade. Let’s figure how big his position size needs to be to stay within his risk comfort zone.

Using his account balance and the percentage amount he wants to risk, we can calculate the dollar amount risked.

USD 5,000 x 1% (or 0.01) = USD 50

Next we divide the amount risked by the stop to find the value per pip.

(USD 50)/(200 pips) = USD 0.25/pip

Lastly, we multiply the value per pip by a known unit/pip value ratio of EUR/USD. In this case, with 10k units (or one mini lot), each pip move is worth USD 1.[U]

USD 0.25 per pip * [(10k units of EUR/USD)/(USD 1 per pip)] = 2,500 units of EUR/USD

So, Newbie Ned should put on 2,500 units of EUR/USD or less to stay within his risk comfort level with his current trade setup.

Read more: http://www.babypips.com/school/undergradua...l#ixzz3PQfRAHNO


Hope sifus can decode it into a more simpler english!

I understand the first step and 2nd step.. which is dividing your risked amount of USD50 with the SL.

But i dont get the next step...