Forex Basics - Lot Sizes, Risk vs. Reward, Counting Pips

hey what's going on everybody is mr. Kingdom cash Charles Dyson here and in this video I'm gonna be going over the basics of forex I'm gonna go over a lot sizes I'm also gonna go over counting pips and the last thing I'm going to discuss is risk versus reward all three of these subjects are vitally important for you to understand to become a successful trader if you don't get these three things down if you don't know them like the back of your hand then you're not gonna set yourself up for success so I'm gonna go over these three topics in great detail to make sure that you have a great understanding of these three things shout out to the Kingdom cash trading squad and also to the movement my wife not helped found the bottarga 365 family thank you guys for watching and to you right the viewer for watching this video and if you are not proficient with trading if you're struggling with trading you're trading on your own and you need help I invite you to go to my website show me and seven calm show me in seven com where you can learn more about how you can get direct mentorship from myself alright hope you guys enjoy the video alright so in order to become a great trader you have to get very very good at the basics right the fundamentals right which are understanding lot sizes bare minimum if you put the wrong lock size in you can blow your account that's not what you want so you have to get that down you have to understand that without a shadow of a doubt you have to understand how to calculate your risk versus your reward no doubt about it and risk versus reward is basically how to calculate the amount you stand to lose in a trade versus how much you stand to making a trade okay so without a doubt you have to understand that right counting pips again basic understanding you have to know this in order to be a great trader so that's what I'm gonna go over in this actual video alright and these are some of the things that you know I found to be you know difficult in the beginning when I was first learning how to trade and I want to make this very easy and simplified for you so lot size right lot size is basically what you will put into your metatrader4 f where we executed the trades and this has to be correct this there cannot be any mistakes when it comes to the light side and this is what you're gonna communicate to the metatrader4 app to let it know how much money per pip that you want to make in a trade and remember in trading pit is the unit of measure right it's how we measure the market think of a ruler if you have a ruler right without any numbers you will know how long things are you wouldn't know how to measure things it's the same exact concept with Forex pips all right is how we measure the market is how you determine how far in the market move right so lot sizes is what we use to determine how much money per pip that we actually want to make so this is extremely important it has to do with money the can that there cannot be any confusion about how to convert a lot size into money so this is how you do it it's very very simple all you have to do is remember to move this decimal point over one time to the right okay if you can remember that then you won't go wrong so if you imagine imagine this zero not being here and you just move this decimal point to here right one time to the right then you get what I have right here right but it just doesn't look familiar to you right so all you got to do is add a zero put a money sign and now you now that looks familiar to you right without the money sign without this zero it doesn't look like anything you can recognize but if you just add that zero in put that money sign there oh ten cents right that's the full extent of how difficult this is fracking you do this so again what do you have to do move the decimal point one time to the right now this would be considered the light side 0.01 equals 10 cents per pip okay in money 0.02 lot size equals again move the decimal point one time to the right you get zero point two right zero point two like I do add that 0 there at the money signs Oh 20 cents per pip right same thing here if you get the pattern very simple 30 cents per pip right very very easy to understand now same thing here all we're doing is moving the decimal point one time to the right so we do that move the decimal point one time to the right it looks like this right that's what it looks like but right so zero point one zero lot size equals one point zero that's not a number that's not a number for money all we gotta do is add that zero in oh it's one dollar per pip got it very simple move the decimal point one time to the right and you will get something that looks like that right now if you want to include this zero it would look like that but obviously we don't need that zero there right so just move the decimal point one time to the right add your zero right here and what do you get oh it's two dollars per pip right over here same thing three dollars per kid very simple same thing right here okay same exact thing don't let it confuse you just move the decimal point one time to the right so instead of one point zero zero move it to the right one time you get that we do add to zero for the money saw ten dollars per pip same thing here right $20 per pip same thing here $30 per pip I think you get the picture but just to make sure what would this be ah same thing will the decimal point one time to the right add to zero what I was 50 cent per pip what would this be if you're getting the pattern you should you should be getting faster at this right without even thinking what would this be the same thing what would that be two dollars and sixty cents per pip you want to get to the point where this becomes second nature okay so you don't have to guess or wonder am i right is it correct that's not where you want to be you want it to be fluid quick this is $12.40 per pip right real fast no matter what the number is what do you do move the decimal point one time to the right for nine nine point two at a zero that's 499 dollars and 20 cents per pip simple right no matter what the number is the rule remains the same okay what is that 6500 $12.80 per pip what did I do just move the decimal point one time to the right and that's the answer that you get six five one two point eight add to zero right so if you understand how to convert a lot size into money then you should never make a mistake putting in your lot size when you're executing your trades that's one of these simplest things that you can control and that you should never make a mistake with doing you always have to double check to make sure you're entering the correct lot size so you do not make a mistake and put the wrong number there and potentially below your account from a few pips all right so size is extremely important but after this exercise you guys should have a clear understanding on how it is you calculate or translate a lot size into money right so you understand how much money that you're gonna make all right perfect so next topic risk versus reward how much how to calculate the amount you stand to lose in the trade versus how much you stand to make in the trade rich versus reward so what I'm gonna do we're gonna do some examples based on the charts all right so risk versus reward very simple how much you're stand to make in a trade versus how much you stand to lose in a trade so let's just say we're gonna take a cell it's gonna be my entry point right here right I will put my stop-loss let's say here for example and my tick profit would be let's say here all right I've changed this right here thank that to yellow the yellow line would be my entry point this red line will be my stop-loss green line would be my take profit how do we calculate what I stand to lose in the trade versus what I stand to make in the trade in this example let's examine all right so firstly let's write down our numbers so remember the yellow line would be our entry okay so that yellow says zero point seven six eight nine one okay stop-loss says zero point seven seven zero six point take profit says the green 0.76 three six nine alright so what you need to remember okay it's my risk would be how much I stand to lose how much can I lose in a trade or nothing in this trade this is the question you have to answer right so the reward is going to be how much can I make in this trade right that's going to be reward all right so if the risk is how much how can I lose then that would be the entry point from the entry point to the stop-loss is my risk so entry point - stop loss equals risk got it and obviously the reward would be how much money can I make in this trade from the entry point let me take profit so we go to entry point - take say profit equals reward so what I want you guys to remember always do subtraction that makes this so easy I'm gonna show you why right always do subtraction right so let's work with these numbers that we have here now that we've done the definition okay so let's do the risk what's the risk entry point - stop-loss alright so here's what I need you to understand always always all right remove the last number it does not matter right this is just the rule and I'm trying to keep things simple for you so you don't not overcomplicate things don't XY this is just the way it is alright entry point - stop-loss all right so let's pull out our calculator here let's do some math if you point zero point seven six eight nine let's make this basket minus zero point seven seven zero six which is the stop loss equals now the answer right here has a negative it has zero point zero zero one seven right we're gonna completely ignore the negative in the zeros what's the answer seventeen pips that is the answer the distance from the entry point to the stop loss is seventeen pips I don't care about the negative sign I don't care about the zeros all I need is the seventeen pips all right so the risk is seventeen pips right my reward what's that gonna be entry point - take profit once again zero point seven six eight nine entry - hey profit 0.763 653 pips again these zeros don't matter all I'm interested in is this number right here my reward is 53 pips boom that's how we calculate risk versus reward okay that's how we calculate the risk versus reward all right let's do a different example alright let's do another example quick got the face keep the same format get rid of this this number we're gonna change this I'm going to do this again all right so let's come up with a different scenario let's say this is my stop loss this is my take profit we're going for by we go for a buy all right I'm gonna go for a buy so yellow entry point red stop loss green take profit right so entry in this example zero point seven six eight nine one stop loss zero point seven six six five one take profit zero point seven seven five four one all right once again first thing we're gonna do get rid of the last number it does not matter at all all right never forget that step okay so risk entry point - stop-loss all right zero point seven six eight nine - stop-loss 0.766 five twenty four pips is the risk twenty four pips it's my risk that's how many pips I can lose in the trade how much can I make in the trade entry point - take profit real simple entry point zero point seven six eight nine - take profit 0.775 for equals what do you know sixty five pips I don't care about the negative I don't care about the zero all I need is the answer sixty five tips is my reward okay got it so you guys after those two examples should understand how to calculate risk versus reward rinsed versus reward all right risk versus and pretty much covered how to count pips you guys know exactly what you do to count pips I just talked to you write the number down take your number off the last number all subtract entry - style loss and if you - take profit that's how you count pips okay now I'm going to do one more example with a JPY pair I feel that's very important so you don't get confused right let's do usd/jpy all right this is a important all right so let's do let's do an entry point here let's do one off like this let's do an entry point here take profit here gonna make this it's okay let me just drain and let's do a stop loss here so this would be a cell okay entry point take profit stop loss all right let's calculate there you go so when you're rid of this example I'm going to be math right here right now okay so entry is the yellow will be one one zero point seven seven seven stop-loss one one one point one three zero take profit the green one zero nine point seven oh eight now the last example had five numbers after the decimal point this one only has three right rule still applies last number does not matter okay don't let that confuse you alright so entry point one one zero point seven seven for the risk we're going from the entry point to the stop-loss stand find out how much the risk is so we're going to subtract the stop-loss one one one point one 336 pips is our risk booyah reward right ward if you point - tape profit so in three point one one zero 24/7 seven - nine zero nine point seven zero is my take profit okay decimal point does not matter remember remember decimal point does not matter answer it 107 pips 107 tips is my answer I just wanted to make sure we cover a JPY pair so you guys can understand how to do the math of that now let's add money to this it's add money to this all right let's say I have a let's add it - all right so let's say I have an account with a penis I'll say I have an account with $200 in I have a $200 account all right in my live trading account I'm gonna use a lot size of zero point eight zero in my trade okay zero point eight zero how much money is that guy should know eight dollars per pick thanks off eight dollars per pip if my risk is 36 pips how much money could I lose in this scenario in this example so risk is 36 pips times eight dollars per pip how much money could I leave let's find out okay we're gonna do eight times 36 whoa answers excuse me answer is too many but I only have a two hundred dollar account you see why the lot size is important what lochside you enter matters because in this scenario I would lost two hundred eighty eight dollars but I only have two hundred on our account that means I'm gonna lost every single penny in my trade account because my lot size was too large do you understand that let me say it one more time thirty-six pips right which is my risk in this trade and I'm in this trade at eight dollars per pip so if I lose this trade I would lose two hundred eighty eight dollars but I only had two hundred dollars in my account that means I will lose more money than I actually have in my account right which means my account would go to zero which means I have no more money to trade I lost it all right therefore I would never use this large of a lot size on this particular tree not with only a $200 account right so I just wanted to illustrate to you guys why lot sizes are important so another example well let's just say I used a a 1 0.02 lot size which is 20 cents per pip and the risk would be 36 multiplied by 20 cents per pip all right how much money could I lose any straight times - yeah thanks oh I will only lose seven dollars and twenty-six out of my two hundred dollar account you know what I'm not sweating that if I lose that money right if I lose seven dollar 26 not too bad out of a 200 dollar account right but if I win this trade how much money could I make right so 26 per pip you can back 107 times 20 cents per pip all I can make $21.40 let's make sure I did that right 107 times 0.2 yo I can make twenty one dollars in this trade only one dollars in 46 all right so I'm risking seven dollars to potentially make twenty one dollars which is three times the amount of the loss if I lost seven but I have a potential to make twenty one that's a good risk versus reward ratio what is that risk versus reward ratio what that means is how much do I want to make versus how much can I lose right the ratio between the two a good trader like myself I always want a 1 to 3 ratio or higher what does that mean I want the ability to make 3 times the amount for my reward as I'm risking right so what does that mean well in this example my risk is 36 pips right so if I know my risk is 36 pips okay risk I want to make at least 3 times that amount in order for this to be a valid trade that I would take right so what I would do is I would calculate okay let's see 36 times 3 108 pips I'm getting 8 hit ward at least okay and guess what my reward is 107 pips so I'm one hit off one pip off what I still take this trade based on the numbers based on the money seven dollars versus 21 I was still taking I was still take it right but I just wanted you guys to get a mental picture about how that works risk vs. reward ratio so I want to be able to make at least three times the amount of pips or else I'm not going to take that tree let's do one more example to make sure you guys get what I'm saying all right let's do one more example all right so this yellow is gonna represent my entry point red is gonna represent my stop-loss Green is my take profit let's just do this quick example one zero nine point four zero six gonna be my entry point my stop losses won't be one zero nine point one zero six my take profit is going to be one zero nine point seven nine three all right what's in my risk how many pips you're gonna be my risk right so what I'm gonna do is I'm gonna remove this last number and it does not matter right and I'm gonna take my entry point one one zero nine point four zero minus my stop-loss one zero nine point one zero oh okay so my risk is going to be thirty hips don't let it confuse you right because we're working with zeros from the last number remember right 4 minus 1 is 3 0 minus 0 0 but the calculator didn't account for that 0 so don't get confused that 0 still is there 30 pips okay now my reward reward it's gonna be my entry point one zero nine point four zero minus my take profit one zero nine point seven nine okay 39 pips and Nan tips is my reward now if I have a one two three risk vs. reward ratio then that would mean my risk is 30 pips so I need three times that amount at least for my reward three time excuse me three times that amount would be 90 pips I need at least 90 pips but this trade to be violent for me to take it and my reward is only 39 pips so I would never take that trade I wouldn't never take that tray right but let's change the parameters right let's change it change the parameters let's say I take pocket was all the way up here okay I say my tape rocket was on way up there so that changes things might a pocket is now 111 point one six eight okay last number does not matter this pretty cool Ward figure it out let's do the math well the calculator out right risk if you point to stop +10 9.40 - my stop-loss one zero nine point one zero stands the same 30 pips 35th stop-loss and then my take profit entry point - they pop it on one one point one six one hundred and seventy-six tips on it 76 tips now bomber risk vs. reward one two three so my risk is 30 pips so I need at least three times that amount which would be 90 pips and in this example I would make 176 pips which would be far greater than my ninety pick minimum so guess what this would be a valid trade this would be a violent trade so following that example if we used money let's say I have a $400 account $400 account right and let's say I wanted to use a zero three Lots on 0.03 well that would be 30 cents per foot okay well how much money can I make well my riskiest 30 pips mom awardees 176 pips so how much can I lose let's answer that question first so 30 pips times 30 cents per pip with equals nine dollars nine dollar risk right I'll do the math in my head but 30 Tom's point three zero equals nine dollars right non dollar risk versus model award which is 176 pips 176 pips times 30 cents per pip with equal 1 176 x point 3 0 oh I can make 52 dollars in this trade 52 dollars and 86 would be my reward so I'm risking nine dollars out of my $400 account with the potential to make 52 dollars in 86 and Mama Ward do you understand why risk versus reward is very very important because if I can risk 9 dollars with the potential to make 52 dollars listen I'll take that risk all day long right because I'm not losing that much money I'm only risking 9 dollars if I'm wrong right and if I'm wrong guess what I can live with that nine dollar loss but if I'm right I can also live with a $52 take profit I'm risking nine dollars in my account for the potential to make fifty-two dollars that is a great risk versus reward now do you see why all this is important why understanding how to convert a lot size is important why understanding how to calculate you know your risk versus reward is important why your risk versus reward ratio is important how it's important to be able to understand what to do in order to be able to count pips and the math behind it and this this is why I teach it the way I teach it to make it very simple and easy for you guys to understand listen ladies and gentlemen if you're watching this video right now and you're brand new to trading right you don't know too much about trading but you're interested you want to learn you want to get sharper what I invite you to do if you would like to be trained personally by me right in my squad Kingdom cash trading squad I help people personally every single day we make money together you can learn how to trade right and take your own trades and you also can be provided signals basically copy and paste signals trade signals from people who make four to five figures per week in the market you can get them straight to your cell phone it's that interest you making money from your cell phone right and being trained personally by me you can go to show me and seven comm show me in seven calm you can go there and find out more about how the platform that I learned to trade works and you also can learn how to trade on the same exact platform and be provided trades that you can take to be profitable in the market right and for you guys who are experienced as well if you're trading on your own you want to come trade with a group of traders like-minded individuals get analysis you get you know strategies and different things like that also I invite you to go to that same website show me and seven calm and I'll be more than happy to help you right just get connected with us through there and also everybody watching this video be sure that you follow Christina and I on social media on the text that you're seeing on your screen right now and I really appreciate you for watching I hope that you got great value from this video if you have any questions please find me on Facebook or any of my social media attacks shoot me a message ask me a question I'll be more than happy to help you and let's keep growing must keep again being profitable in the market let's keep simplifying trading and make this as easy as it truly is everybody have a great day

Channel: Kingdom Kash

Views: 764,027

Rating: 4.9432535 out of 5

Keywords: Forex Basics, How To Convert Lot Sizes, Forex Lot Sizes, Risk vs. Reward, How To Calculate Risk vs. Reward, How To Count Pips, Counting Pips, How To Count Pips In Forex, Iml, IML, What is IML, iMarkets Live

Id: toS6OO04u8o

Length: 36min 24sec (2184 seconds)

Published: Thu May 31 2018