In Forex trading, the trick to being successful is to carefully plan and weigh your risks before starting a new trade. The position size calculator helps you make precise movements while trading to ensure you don’t trade more than you can risk. Our team at WR Trading has prepared this detailed guide on using our Forex position size calculator. You will also learn about the benefits of using this trading tool to ensure long-term success.
What Are The Specifications of The Forex Lot Size Calculator?
Our Forex position size calculator is designed to automate lot size calculations and manage trades to reduce risks and increase profits. It comes with the key features:
- Risk: Every trade has a potential for losses and this is known as the risk usually represented in pips or currency units. If your risk is 50 pips, you can enter this unit in your calculator and use the result to determine the right position size for your trading account.
- Account Balance: Your account balance is the total value of money left in your trading account. Our calculator uses this value to update the required margin for a trade.
- Stop Loss in Pips: This is the distance between your stop loss price and entry price calculated in pips. Our margin calculator uses the stop loss in pips to fix the position size and the required margin.
- Current Exchange Rate: This is the value of the market price for the currency you’re currently trading with. The online pip value calculator uses this current exchange rate to measure the margin requirements.
- Risk For Your Account: If you have $5,000 and you’re willing to risk 2%, the risk for your account is the 2%. Our online calculator determines the best position size for your trade including the risk for your account.
- Best for FX Traders
- Multiple Platforms available
- Regulated in New Zealand
- Fast deposits & withdrawals
- Fast sign up process
How Does The Forex Calculator Work?
Our Forex calculator helps you to manage risks and works by calculating your lot size in a trade position. It involves multiplying the position size and currency pair by a percentage of the total lot size. Here’s an overview of how it works:
- Provide The Required Data
Gather and input the following variables into the system to calculate your position size:
- Currency Pair
- Position Size ( In Lots)
- Account currency
- Open Price
- Position type
- Stop-Loss Price
- Take-profit value
By inserting these values, you can predict different outcomes depending on your position — For instance, the bigger your risk tolerance and account, the bigger your position size.
- Calculate The Position Size
Our Forex position size calculator computes the values to show the level of risk in each trade. It multiplies the position size by the range of pip movements in a trade. It also simplifies how much profit can come from a pip. In cases where the currency pairs are not in USD, it can still compute the data and convert the number into your base currency.
- Present The Result
Based on your defined risk tolerance, the calculator will display the possible moves you can make at each underlying point of a trade. It also shows the result by converting the account’s base currency and the trade.
Check out our other Trading Calculators as well
What Is The Position Size In Forex Trading?
Position size refers to the specific number of units a trader is willing to purchase or sell in a particular currency pair. It is the total size of a trade, whether the trader buys or sells. The position size in Forex typically depends on the amount of risk a trader is willing to accept because the higher the position size, the higher the risks.
What Are Lots in Forex Trading?
In Forex trading, “Lots” represent a unit of measurement and are used to quantify the size of a trade. The lot size will determine your position size. Therefore, you must carefully choose your lot size based on how much profit and risk you can manage.
What Are Pips In Forex Trading?
Pip refers to “Percentage in Point.” It shows the smallest change in value from two currencies in a pair. For instance, if the value of EUR/USD rises from 1.1050 to 1.1051, the 0.0001 USD difference is the value of one pip.
- Best for FX Traders
- Multiple Platforms available
- Regulated in New Zealand
- Fast deposits & withdrawals
- Fast sign up process
How To Calculate The Forex Positions Size Manually
Using our online forex calculator, you can effectively automate calculations and easily determine your trade values. Take this example:
Assuming Sarah’s account balance is $2,000, she is only willing to risk 2% while trading GBP/USD, and her stop loss is 50 pips. To calculate her position size manually, Sarah will need to take the following steps:
Step 1: Calculate the Dollar Amount Risked
Dollar risked = Account balance x Risk (%) per trade
Dollar risked = $2,000 x 0.02
Dollar risked = $40
Step 2: Find the Value Per Pip
Value per pip = Dollar Risked ፥ Stop Loss Value
Value per pip = ($40 ፥ 50)
Value per pip = $0.80
Step 3: Calculate Position Size
Position (Lot) Size = Account Balance x Risk Percentage
Pips Risked x Pips Value
The pip value is $1 per pip for 10,000 units in a mini lot GBP/USD.
Position size = $2,000 x 0.02
50 x1
Position size = $40
50
Position size = 0.8 mini lots
Therefore, Sarah will trade 8,000 units of GBP/USD to keep her trade risk at 2%, which is $40 per trade.
How Much Should You Risk Per Forex Trade?
In Forex trading, your risk level depends on your position size, lot size and the total value of your trade. However, our expert traders at WR Trading recommend limiting your risks to 1-3% of your trading capital on a single trade.
