How do I calculate position size? | Forex Factory

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How do I calculate position size?

  • #1
  • First Post: Jan 21, 2013 4:09am Jan 21, 2013 4:09am
It's a shame that after 3 years of trading i am unable to properly risk a fixed percentage of my account on any trade, Simply how do i calculate position size or the money i have to risk on a trade, there are lots of online position size calculator out there but they don't seem to be accurate due to the difference in leverage.

So suppose for example if Sam has a $500 account and he wants to risk 10% on a single trade, he wants to buy eur/usd at 1.3300 and his stop loss is 27 pips at 1.2973 and his leverage is 500:1 , how do you calculate the lot's ? please present your example in totally easy way ! thanks
  • #2
  • Jan 21, 2013 5:05am Jan 21, 2013 5:05am
You can use: http://www.forexfactory.com/showthread.php?t=281772
Thoughts are things
  • #3
  • Jan 21, 2013 6:05am Jan 21, 2013 6:05am
It is a pretty simple formula... Position Size = (Account size * percent exposure)/# pips risk * pip value (10 = standard, 1 = mini, 0.1 = micro).

In the above you must use the value of each pip. Example EUR/USD is always 10 ($10 pip standard lots), but if the EUR/JPY is $11.25/pip then you use that number accordingly. (11.25 standard, 1.125 mini, .1125 micro)

You must also figure in your stop size (in pips). The below example uses a 25 pip stop (# pips risk).

In your example of a $500 account:

  1. 500 * 0.1 = 50
  2. 50/25 = 2
  3. 2*.1 (mini lots) = 0.2 (2 mini lots)


I would strongly recommend you do NOT risk 10% on any trade if you don't even know how to calculate your risk exposure. You can use the same formula to calculate micro lots and have a much "safer" trade risking only 1% of your account. That way if you lose you will still have 99% left to work with. Losing 10% only leaves 90% left...

Your money your choice.

  • #4
  • Jan 21, 2013 6:12am Jan 21, 2013 6:12am
not working for me, nothing happens after i right click on EasyOrder and "execute on chart"
  • #5
  • Jan 21, 2013 6:29am Jan 21, 2013 6:29am
Quoting saiftauheed
not working for me, nothing happens after i right click on EasyOrder and "execute on chart"
Hey thanks for helping, but how does leverage effect it I mean doing the same calculation above on an account with 100:1 leverage and another account of 500:1 leverage, is there any changes or not ? like in value per pip?
  • #6
  • Jan 21, 2013 6:48am Jan 21, 2013 6:48am
Quoting saiftauheed
Hey thanks for helping, but how does leverage effect it I mean doing the same calculation above on an account with 100:1 leverage and another account of 500:1 leverage, is there any changes or not ? like in value per pip?

The risk percentage you want to take for each entry has nothing to do with leverage.
If you want to risk 5% of a 500 account in a specif trade ($25), you would place a stop
at whatever price your loss would be $25.- It does not matter what leverage your broker
provides for you.

J.
  • #7
  • Jan 21, 2013 8:09am Jan 21, 2013 8:09am
Quoting jeuro
The risk percentage you want to take for each entry has nothing to do with leverage.
If you want to risk 5% of a 500 account in a specif trade ($25), you would place a stop
at whatever price your loss would be $25.- It does not matter what leverage your broker
provides for you.

J.
Hi, In my limited knowledge of the market I think there will be a difference in the lot size for a 500:1 account and a 100:1 account. like suppose to risk 5% on a $500 account with a leverage of 100:1 it could be 0.5 lot but to risk the same amount on a $500 account with a leverage of 500:1 the lot size would be much less that is used in the 100:1 account ! this is because increasing the leverage increases your account value fluctuation per pip ! right?
  • #8
  • Jan 21, 2013 8:32am Jan 21, 2013 8:32am
Quoting saiftauheed
Hi, In my limited knowledge of the market I think there will be a difference in the lot size for a 500:1 account and a 100:1 account. like suppose to risk 5% on a $500 account with a leverage of 100:1 it could be 0.5 lot but to risk the same amount on a $500 account with a leverage of 500:1 the lot size would be much less that is used in the 100:1 account ! this is because increasing the leverage increases your account value fluctuation per pip ! right?
No. The account leverage just determines the margin required for your position. Other than that the 100:1 and 500:1 account are the same.
  • #9
  • Jan 21, 2013 8:58am Jan 21, 2013 8:58am
This works, for me:

http://www.earnforex.com/position-size-calculator
  • #10
  • Jan 21, 2013 9:32am Jan 21, 2013 9:32am
Quoting euclid
No. The account leverage just determines the margin required for your position. Other than that the 100:1 and 500:1 account are the same.
Hi, so you mean with increase in leverage (500:1) we can just trade a higher number of lots as opposed to the account with 100:1. and the required margin % goes down with an increase in leverage ?
  • #11
  • Last Post: Oct 1, 2014 8:59pm Oct 1, 2014 8:59pm
Quoting saiftauheed
{quote} Hi, so you mean with increase in leverage (500:1) we can just trade a higher number of lots as opposed to the account with 100:1. and the required margin % goes down with an increase in leverage ?
Duh, this had to be a good troll or something *clap clap* +1 search button
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