Forex Position Size Calculator
Position size calculator is one of the inevitable tools that every forex trader needs if he/she knows the basics of money management.
In the following calculator, you can determine the position or lot size of your trades by entering the balance of your account, the percentage risk you want to take for your trade, your stop loss in pips, and the forex pair that you want to tradePosition Size Calculator widget is provided by DailyForex.com – Forex Reviews and News
When you start forex trading, you probably don’t know much about managing your capital and definitely don’t know the importance of that while it’s the only savior of your account in the early stage of your trading career where you are not a profitable trader.
One of the main factors that you need to consider is position size. In other words, what the correct lot size is based on the risk of each position, which is determined by your stop loss.
There are some tools that you can use to calculate the correct size of your positions such as indicators or expert advisors codded for this purpose but what I like and use is a position calculator.
The reason is that I don’t like my charts to be cluttered with lines of texts — especially when I use pending orders and I know where to put exactly my stop losses way before entering a position.
Aside from what tool you use to calculate positions sizes, the formula for all of them is the same so let’s dig deeper and see what’s inside the calculation of a position calculator.
Position size calculation
To calculate position size, we use this formula:
Position size (lot) = (Account Balance * percentage risk) / (pip value * Stop Loss in pips)
As you can see, those are all the components of our position size calculator except pip value that is calculated according to different currency pairs.
For calculating the value of one pip of forex pairs, divide one pip, which is 0.0001 for most pairs and 0.01 for the pairs with JPY, by the current price of the pair. Then multiply that by lot size in units.
(one pip / current price) * contract size
- Each standard lot is equal to 100000 units
- Each mini lot is equal to 10000 units
- Each micro lot is equal to 1000 units
Note: for the forex pairs that the US dollar is the second currency in them, AKA quote currency, the pip value for one standard lot is equal to $10. Mini lot is $1, and micro lot is $0.1. For other currency pairs, use the above formula.
Example: you have $1000 in your account and want to risk 5% of your account in each position. Let’s say your stop loss is 20 pips.
Now we have all parts for calculating position size but pip value. So, let’s calculate pip value first.
Let’s assume you find a trade on GBP/JPY and the price is at 132.380. Since we have JPY as the quoted currency, one pip is 0.01.
So according to our formula the pip value for GBP/JPY is:
(0.01/ 132.380) * 100000 = £7.55
If we want that amount in USD, we need to multiply that by the current price of GBP/USD. Let’s say that the current price is 1.2404 then we have:
7.55 * 1.2404= $9.365
Therefore, the pip value of one standard lot of GBP/JPY is $9.365.
Now that we have all the elements for calculation position size, let’s see what lot size we should use for our trade in the example.
Lot or position size= (1000 * 5%) / (9.365 * 20) = 0.2669 or ≈ 0.25 standard lots
2.5 mini lots, 25 micro lots
The balance of our account is $5000. We want to trade EUR/USD and risk 2% of our account. Our stop loss is 50 pips.
As we saw earlier, since we have a currency pair with USD as the quote currency, therefore, one pip here is worth $10.
According to the position size formula, we should pick following lot size:
(5000 * 2%) / (10 * 50) = 0.2 standard lots
or 2 mini lots, 20 micro lots