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Four metrics to calculate any international CFD stock position size

by , 03 March 2022
Four metrics to calculate any international CFD stock position size
In our QA mailbox this past week...

Q. “I am with Pickpocket Trader and before I take a trade, I would like to know how to calculate the number of international CFDs I need to buy to risk 3% of my R55,000 portfolio. Let's use the example from the most recent trade sent out on 11 February 2022”.

A. You'll need four metrics to calculate the number of international CFDs you'll need to buy.

As you suggested we'll use the most recent trade example with MBG (Mercedes Benz Group).

Here are the metrics we need.
Metric #1: Entry price = 70.50 Euros
Metric #2: Stop loss = 68.00 Euros
Metric #3: Euro/Rand = 1 Euro = R17.60
Metric #4: Risk amount in trade = R1,650 or 93.75 Euros
(R55,000 X 3%)
 
Next we'll need to calculate the ‘Risk in trade’ which is the price difference between the entry and stop loss.
 
Risk in trade = (70.50 – 68.00)
                   = 2.50 Euros
 
To calculate the number of CFDs you'll buy, you'll simply divide the amount you're willing to risk by the 'risk in trade'.
 
No. CFDs to buy = (Risk amount per trade ÷ Risk in trade)
                        = (93.75 Euros ÷ 2.50 Euros)
                        = 37.50 CFDs
 
Make sure you always round down the no. of CFDs you'll buy, to prevent risking more than 3% of your portfolio.
 
This means, you'll buy 37 CFDs of MBG (Mercedez Benz Group) to not risk more than 3% of your portfolio for this example.
 
What a Pickpocket Trader has to share:
 
“The best trades that I had made me about R8,000 from Brent crude and USD/ZAR. I also made money on Merck, US 500 and DE30. I am none the less keen to get in on my next lot of trades.”             ~ Arius
 
 
Q.“I have been wanting to get on my hands on the MATI Trader System Programme and Red Hot Storm Trader to create my financial freedom. But I have one question at the back of my mind… Is there a point of having both?”
 
A. This is a very common question I get asked pretty much once a week.
 
Before I answer the question, allow me to explain the difference between the two products.
 
The MATI Trader System Programme and Red Hot Storm Trader are two separate and independent services.
 
The MATI Trader System Programme consists of 5 videos, 1 book, and 3 calculators - basically a course which will help you learn how to trade successfully from an easy and proven breakout, low risk, 70% win rate 18 year old trading strategy which works on any financial market including stocks, indices, Forex, commodities and even crypto currencies.
 
Anyone who has the MATI Trader System Programme, will have the edge on most traders because of its proven strategy.
 
The Red Hot Storm Trader service is an excluse trading service where I send out live weekly trade ideas on local stocks and indices that I have personally identified using my Mati Trader system.
 
Learning to trade using the Mati Trader system together with the trade ideas from Red Hot Trader will make you a more profitable trader, because together the services save you money and research time and fast track the learning curve.
 
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Four metrics to calculate any international CFD stock position size
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