forex-scalping.com

I built a small spreadsheet that calculates position size and, next to it, the cost of the trade in R. It's changed which trades I take.

Inputs:

• Account size, risk %, stop in pips, pip value per lot.
• Current spread and commission per lot.

Outputs:

• Position size, rounded down to the lot step.
• Total cost of the round turn in money and as a fraction of the risk.

Example: 10,000 account, 0.5% risk = 50, 4 pip stop on EURUSD, 10 per pip per lot gives 1.25 lots. Spread 0.2 plus commission 7 per lot = 0.9 pips cost equivalent, so cost is 0.9/4 = 22.5% of R. That's a lot.

With an 8 pip stop the cost drops to 11% of R. So tight stops look attractive but carry a heavy cost in R terms.

I now skip setups where cost exceeds 20% of R. Do others track cost in R?