This article has been translated from English to Gen Z Slang.
So you wanna cop some EUR/GBP but your broker’s account is all about that USD life. 🤔
You're tryna only risk USD $100 on this vibe. But hold up, you ain't dealing in dollar bills, you're playing with euros and pounds! How the heck do you size up your play? 🤨
In today's sesh, we're gonna spill the tea on how to nail your position size when you're flexing with currencies that ain't the same as your account denomination. 🤑
If your account denomination isn't in the pair you're trading, but it's twinning with the conversion pair’s counter currency…
Example: USD account trading EUR/GBP
Ned's back from the last lesson, chilling stateside. Today, he’s vibing with EUR/GBP with a 200 pip stop. 🏡
To get that slick position size, we need to figure out Ned’s risk in British Pounds.Remember fam, the value of a currency duo is in the counter currency.
Step 1: Determine risk amount in USD
Alrighty fam, let's get lit. Ned’s back on his U.S. broker grind selling EUR/GBP, and he's only tryna risk 1% of his USD 5,000 account, or USD 50. 🔥
To score the right forex position vibe in this sitch, we need that GBP/USD drip.
Step 2: Convert USD risk amount to GBP
Let's hit up 1.7500 and since his account's in USD, we gotta flip that exchange rate to get the goods in British Pounds. 💸
USD 50 * (GBP 1/USD 1.7500) = GBP 28.57
Now, let's roll through the rest like it's any other day.
Step 3: Convert GBP risk amount to pips
Divide it by the stop loss in pips, fam:
(GBP 28.57)/(200 pips) = GBP 0.14 per pip
Step 4: Calculate for position size
Lastly, roll with the known unit-to-pip value ratio:
(GBP 0.14 per pip) * [(10k units of EUR/GBP)/(GBP 1 per pip)] = roughly 1,429 units of EUR/GBP
Ned can sell no more than 1,429 units of EUR/GBP to keep it chill with his pre-locked risk vibes. 🔒
If your account denomination isn't in the pair you're trading, but it’s vibing with the conversion pair’s base currency…
Example: CHF account trading USD/JPY
Ned's shreddin’ in Switzerland, hitting those slopes. ⛷️ In between some movie-worthy runs, he whips out that spy gadget and gets his trade on with a local forex hookup.
He spots a lit setup on USD/JPY, and he’s ready to bounce if it dips past a major resistance level—like 100 pips wild. 🔍
Step 1: Determine risk amount in CHF
Ned’s keeping it 100 with the 1% of his CHF 5,000 account or CHF 50 risk. 💪
Step 2: Convert CHF risk amount to JPY
First, we gotta nab the value of CHF 50 in yen, and since the account’s denominated like the conversion pair’s base currency, just multiply the CHF 50 risk with the CHF/JPY drip (85.00):
CHF 50 * (JPY 85.00/ CHF 1) = JPY 4,250
Now, let’s finish with that same energy as the other fam.
Step 3: Convert JPY risk amount to pips
Break it down by the stop loss in pips:
JPY 4,250/100 pips = JPY 42.50 per pip
Step 4: Calculate for position size
And finally, run with a known unit-to-pip value ratio:
JPY 42.50 per pip * [(100 units of USD/JPY)/(JPY 1 per pip)] = around 4,250 units of USD/JPYGang, that’s lit! 🔥
Ned can trade no more than 4,250 units of USD/JPY to keep his loss locked under CHF 50. 💰