Hi Florian,
Thank you for sharing the calculator, it's a nice tool.
I've seen some of your previous posts, and so to summarise that:
When you choose to risk no more than 1% of your account balance, you'll get $5 allowance with $500 deposit.
It is simple to figure out the maximum stop loss you can afford:
1. You need to know the pip value for the currency pair you want to trade with.
If we take GBPJPY, and choose to trade 0.01 lot, the value of 1 pip will be equal to 11 cents.
(It is easy to check with any website where they have live pip value calculators, like the following one:
http://forex-trading-signals.net/pip-calculator , on that page we need the second calculator, where we input the following parameters:
Base Currency: USD
Leverage: 100
Size: 1000 (units)
and ask to show us the pip values for different currency pairs.
(That calculator uses actual real time data).
2. So, now that we know that each pip on GBPJPY will cost us 11 cents, we can quickly estimate the maximum allowed stop distance for our $5.
It'll be $5 / 0.11$ = 45 pips.
That's it.
3. Now, if you place 200 pips stop, that equals to about 5% risk opposed to 1% risk you wanted to use initially.
Is it ok? I'd say, up to 5% is ok, as long as you feel good about the risk. But a normal practice is to not exceed 2-3%.
4. The leverage size is irrelevant as long as you keep the money management cool & sound. The leverage leverages your abilities to buy more, but why would a normal trader buy more, when this increases the risks of losing more should the trade go wrong? Thus, sizing your trades according to the money management rules will never ever put you in trouble!
Where the high leverage is helpful, it is when you lost some money, or never deposited more than $25-$50, or when you're currently holding a losing trade so that your available margin is running out, that's where you've got no option but to leverage yourself higher in order to keep the buying ability alive. In this case the higher leverage is your only option & a saver (if I can say so), because it enables you to trade, which otherwise won't be possible.
So, the leverage doesn't bite, when you handle it correctly.
Best regards,
Edward