How To Use The Position Size Calculator
Risk management is the most important task you will ever undertake as a retail trader.It serves two purposes, one to stop you blowing your account, and the second it controls the amount of profit you make per pip. To calculate the lot size you should use in a trade, you require the following information.
Your Account Currency – What currency is your brokerage account held in.
Your Account Balance – What funds do you have available to trade with in your account.
The Percentage Risk – What percent of your total balance do you want to risk in this trade?
Stop Loss In Pips– How many pips will your stop loss be from your entry?
Currency Pair– What pair are you planning on trading?
Once you have input this information, you can go ahead and click the calculate button.
You result then gives you your required information.
Cash Risk– The actual monetary amount you are risking in this trade.
Position Size– The units of the position you are undertaking
And Lastly, your lot size. The calculator will display three options for this.
The one you need to pay attention to is the ‘standard lots’ as that is the one that will give you the actual lot size you will enter into your trading station (such as MT4)