Position Size Calculator
Learn how professional and retail traders use position size calculators to implement the best risk management strategies. Calculating position size in Forex is critical to accurately managing your risk. This guide will show you how to use our new Forex position size calculator. This way, you can change your trading position quickly, if necessary.
Position size should always be based on your risk tolerance. However, you still need to learn the maximum position size in Forex trading to remain profitable. To this day, the 2-3% rule is pretty standard when trading Forex.
This is an effective way to control risk that establishes only risking 2 to 3% of the account’s value on any particular trade.
Now, what exactly is position size in Forex trading?
The position size has to be part of successful risk management strategies. It tells you how much you should risk each time a trade is opened. It’s the amount of risk you’re willing to take depending on the number of pips being staked when you trade.
Basically, position size takes into account three main parts:
- Account size – The current size of your trading account.
- The amount of risk or % of your real or demo account you’re willing to risk on each trade. This is based on your comfort level and how aggressive you want to trade. Everybody has a certain level of comfort in terms of risk tolerance. However, most pro traders will not risk more than 1% or 2% of their account balance.
- Stop Loss. Suppose you don’t have a stop in place to limit your theoretical maximum loss. In that case, the damage can potentially destroy your account.
This is a basic model to give you a fundamental understanding. Still, you must use position size, along with your money management, to ensure consistency.
Forex Position Size Calculator
Below, there is an outline on using the Forex trade position size calculator.
How to Use the Forex Position Size Calculator
- Choose the currency in your trading account. (Deposit Currency)
- Select the currency pair you will be trading. (Instrument)
- Add the current size of your trading account. (Account Balance)
- Now, add the percentage you want to risk on a trade. Allocate the amount of risk you are comfortable taking. (2-3% is commonly suggested)
- And finally, enter your stop loss in pips. (The amount of allowed price movement in the pair you are currently trading).
Our Forex position size calculator is just one more tool used in risk management. Now that you have our position size calculator, you can have a better night’s sleep knowing that you won’t blow your account due to poor Forex risk management.
This tool will turn any Forex trader, new or experienced, into a competent risk manager.
Check out our Live Forex Trading Signals Inside!