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