Welcome to NexusFi: the best trading community on the planet, with over 200,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- discounts are available after registering.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
Is any of you following the Fixed Ratio Method on FX markets? I would like to discuss pros and cons for FX traders out there that are actively using this approach in sizing.
Can you help answer these questions from other members on NexusFi?
Hello, I trade FX and I am interested in the fixed ratio method and would like to implement it in my trading but I don't know if I must calculate the lot size to start with and how.
For example I have found this but I don't understand how they found the lot size at the end...
"The third step in the previous formulas has been to determine the lot size to start with. This can also be done by defining the Effective Leverage (Please refer to Chapter A03 to calculate the Effective leverage).
The formula with all the variable looks like this:
Max. Drawdown = 200 USD
Initial Capital = 1,000 USD
Fixed Ratio (Delta) = Effective Leverage x Largest Drawdown / 2
1% x 200 / 2 = 100 (effective leverage of 100:1 - trading 0,1 lot)
2% x 200 / 2 = 200 (effective leverage of 50:1 - 0,05 lot)
3% x 200 / 2 = 300 (effective leverage of 33,3:1 - 0,03 lot)"
