HOW TO CALCULATE SIZE OF THE CURRENCY TRADE MARKET?

Currency market is also called Forex market and it has different and fixed tick sizes. It is difficult to calculate movement and trade value in a currency market but there are some ways to calculate it. We observe two movements in it, tick size and tick value. Smallest possible price change is called tick size and smallest change of value in it is called tick value. The tick size in each currency is fixed while tick value is different and it depends on the amount of currency being traded in the market. The tick size will be 0.0001 in each currency and tick value sometimes is decided by the brokerage. There are some rules and regulations of the currency trade market and risk involve in it and it should be 1% according to risk management calculation. For example if you have $40000 then your maximum acceptable risk will be $400. The amount of currency that you want to trade in the market is called trade size and it should be minimum $1 or same in pound or Euro. Trade size can be calculated with the help of tick size, maximum acceptable risk and size of the stop loss. For example if you want to calculate trade size or amount of money then calculations will be as under. The formula of the trade size will be Account size/100/stop loss size/tick size=Trade size If a person is trading Euro to US Dollars with the balance of $10000 and stop loss is 10 ticks then $10000/100/10/0.0001=$100,000 Another example for the calculation of trade size will be If a person is trading from Euro to US Dollars with a tick size of 0.0001 and stop loss is 10 ticks and the maximum acceptable risk is $700 then the trade size will be Trade size=$700/10/0.0001=$700,000 In this way you can calculate amount of currency being traded in the market. The process of calculating trade size is not difficult when trading will be in same currency but it is difficult to calculate when it is traded in two different currencies then amount of capital will be converted in the currency being used. Then formula will be as under Trade size= Account size/100/stop loss size (in ticks)/tick size*exchange rate