Forex Position Size Calculator Methods in Forex Trading - Forex Trading Account Management
Forex Trading Account Management Methods - Forex Position Size Calculator
The Forex Position Size Calculator method is a method where you risk the same percentage of your account balance per transaction - Forex Trading Account Management Techniques.
Forex Position Size Calculator method says that there will be a certain percentage of your forex account equity balance that is at risk per trade. To calculate the percent risk per each forex trade transaction, you need to know two things, the percent risk per forex trade and the Forex Position Size - lot size of an open forex order so as to calculate where to put the stop loss order. Since the percent risk is known, we shall use it to calculate the lot size of the forex order to be placed in the forex market, this is known as position size - Forex Position Size Calculator.
Forex Example - Forex Position Size Calculator
If you have a forex account balance of $50,000 in your forex trading account and risk percent is 2%
Then 2% is equal to $1,000
If three forex traders buy EURUSD and the first one is using 20 pips stop loss, second forex trader is using 40 pips stop, third forex trader is using 50 pips stop, their forex trade position size will be calculated as follows:
Example 1: - Forex Position Size Calculator
Stop loss = 20 pips
Risk percent = 2% = $1,000
20 pips = $1,000
1 point = 1,000/20 = $50
Position size is 5 forex lots (for 5 forex trading lots 1 point movement = $ 50)
Example 2: - Forex Position Size Calculator
Stop loss = 40 pips
2% = $1,000
40 pips = $1,000
1 point = 1,000/40 = $25
Position size is 2.5 forex lots (for 2.5 forex trading lots 1 point movement =$ 25)
Example 3: - Forex Position Size Calculator
Stop loss = 50 pips
2% = $1,000
50 pips = $1,000
1 point = 1,000/50 = $20
Position size is 2 forex lots (for 2 forex trading lots 1 point movement = $20)
Other factors to consider include:
Maximum Number of Open Forex Trade Positions
A final point to consider when trading is the maximum number of open forex trading positions - that is the maximum number of forex trades that you as a trader want to be in at any one given time. This is another factor to decide when managing your forex account capital.
If for example, you chose a 2% risk percent method, you may also say chose to be in a maximum of 5 open forex trade positions at any one given time. If all 4 of those open forex trade positions close at a loss on the same day, then you would have an 8% decrease in your forex trading account balances that day.
