HomeHome SearchSearch MenuMenu Our productsOur products

How to calculate your CFD position size when trading Brent Crude

by , 08 July 2021
How to calculate your CFD position size when trading Brent Crude
“I've recently signed up to Pickpocket Trader and wanted to ask a question.

In the Welcome Guide you suggest, you never risk more than 2% per trade.

However, when we are entering into a number of trades we are risking a larger amount with our portfolio. My question is, what is the maximum number of open trades I should have in my portfolio at any one time?”

 
A. Whether you’re signed up with Pickpocket Trader, Red Hot Storm Trader or you’re running your own trading system, it all depends on your risk appetite.
 
The first question you need to ask is…
 
“What percentage of my portfolio am I willing to risk at a time?”
 
This will give you an indication of how many trades you’ll be willing to hold.
 
When I trade, I never want to risk more than 8% of my portfolio.
 
If I only risk 2% of my portfolio per trade, this means I’ll make sure to never have more than four trading positions opened.
 
If the market environment is unfavourable, then I never risk more than 1% of my portfolio per trade.
 
This means, I’ll be happy to hold 8 trades, as my risk is lower per trade.
 
This general rule has helped me control my risk and never blow my portfolio…
 
________________________________________
 
Finally… Trading Profits
Made easy
 
You do no work. You never study a chart. But you could rake in fast, repeatable profits like…
 
107% in 36 days
119% in 14 days
105% in 20 days
142% in 19 days
 
Average = 118%
 
Double your money in just 22 days.
 
If you want fast, recession-proof gains like these, I must hear from you today
 
________________________________________
 
What a Pickpocket Trader has to share:
 
"I made a number of profits from the last couple of trades with CFDs. I never thought it could be this easy. Nice going.." Jerry, KZN, SA
 
________________________________________
 
Q. “With the most recent trade sent out with Pickpocket Trader, how do I work out the number of CFDs to buy with Brent crude using a R200,000 portfolio with a 3% risk per trade. Can I use the Risk in US dollars divided by the Risk in trade (entry – stop loss) calculation?”
 
A.  Yes definitely. It’s a calculation that you can also use to work out the number of CFDs to buy, that not many people know about.
 
First, when you buy 1 CFD of Brent Crude you’re essentially buying 1 lot size with a contract of 100 barrels
 
 
In other words, when you buy (go long) 1 Brent Crude contract you’ll be exposed to 100 barrels of oil. 
 
At $77 per barrel that amounts to $7,700 total value (100 barrels X $77).
 
Allow me to break up the position size calculation with an example. 
 
Let’s say you have a R200,000 portfolio and you only want to risk 3% of your portfolio or R6,000.00. 
 
With the USD/ZAR exchange rate of $1/R14.30 this means your risk per trade is $419.58 (R6,000 ÷ R14.30).
 
You buy (go long) Brent Crude CFDs with an entry price at $77.00 and a Stop loss at $73.30.
 
Here’s how to work out how many Brent Crude CFDs to buy using the calculation. 
 
Position size = (Risk total ÷ Risk in Trade value per contract) 
                   = ($419.58 ÷ [($77.00 - $73.30) X 100 barrel]
                   =  ($419.58 ÷ $370)
                   = 1.134
 
HOLD ON! 
 
Technically, the ideal CFD position to buy is 1.134 CFDs however… 
 
On most broker platforms (like Rand Swiss using Velocity Trader) each there are only CFD increments of 1 instead of fractions. 
 
This means, you’ll need to round down the number, in order to not risk more than what you plan to risk.  
 
________________________________________
 
How to Grow a Multi-Million Rand Retirement
 
The average 50-year-old doesn’t have enough saved for a worry-free retirement.
 
Fortunately, there’s still time to catch-up and ensure you not only have enough money to last through retirement, but you can retire in style. Golf days, vacations, time with family… no matter what your ideal retirement day looks like, find out how to achieve it by clicking here.
 
________________________________________
 
 
 
 
For example, if you typed 2 CFDs, look at the risk you’ll take instead.
 
 
 
 
Instead of risking under R6,000 (3%), you would risk 5.27% or R10,552 which is more than your risk tolerance.
 
Now you know how to calculate your position sizing when trading Brent Crude CFDs…
 
Trade well, 
 
Timon Rossolimos,
Analyst, Red Hot Storm Trader  


How to calculate your CFD position size when trading Brent Crude
Rate this article    
Note: 3.25 of 2 votes

Related articles



Related articles




Trending Topics