# Position Lot Size Calculator Guideline

## What is a position size calculator in forex ?

Position ( lot size ) calculator for forex market consists of determining the appropriate position size. That is to say, the number of units that a trader should invest in a forex currency , based on his risk tolerance and its account size. Moreover, position sizing is very popular for forex traders on the MT5 platform. In addition, scalping, intraday, and day traders are the most interested in this MT4 position size calculator strategy. Because they usually perform multiple and fast trades per day. In short, this enables them to manage their risk on the MetaTrader trading platform. Thus, maximizing their outcomes. However, if a currency gap occurs below the stop-loss level, the risk limit is consequently exceeded. In fact, this is the only situation where the position sizing strategy fails to control risks on the MT4 platform.

## How do you calculate position size in MetaTrader 4 and 5?

### Setting account risk

Setting your risk percentage is an important measure to determine your forex lot size. In fact, this limits your trading dollar amount of risk for each trade. Thus, setting your account risk is the first step for the position size calculator for MT4. Let us consider an example with an account size of \$10,000. The trader could use a 1% risk limit. Consequently, he is risking a maximum amount of \$100 for that trade. Alternatively, if the limit was 0.2%, then the maximal risky amount would be \$20 for the considered trade.

In conclusion, the dollar amount is always decided by 2 variables. The first is the trading account size. The second is the risk percentage. On the one hand, this percentage is user-defined on MetaTrader. On the other hand, it represents the maximal risk exposure. Thus, this risk limit becomes a trading policy. Note that, the most popular risk percentage is 1% of the account size.

In short, the MT4 calculator considers your account risk in order to calculate your appropriate position size in the MetaTrader 4 terminal.

The stop-loss is a money management order. To clarify, the trade closes at this level. The difference between the entry price and the stop-loss level is called the pip risk. To explain, a pip is usually 0.0001 for the majority of currency pairs. As a result, it represents the fourth decimal place in a forex quotation. However, it is 0.01 for the Japanese yen. Consequently, it is located in the second decimal place for the JPY. Moreover, the fifth decimal place (third for JPY) is named a pipette. Thus, one pip is equivalent to 10 pipettes on the MetaTrader chart.
In the following example, we bought NZDUSD at \$0.67900 and set the stop-loss at \$0.68100. As a consequence, the trade risk is 20 pips. In short, the position size calculator for MT5 decides the trade risk according to the entry and stop-loss levels.

In short, this MT5 calculator considers your trade pip risk in order to calculate your appropriate position size in the MetaTrader 5 terminal.

Now that we dispose of the account and trade risk, The only item left to compute is our position size.

## Lot Size Calculation examples

The  forex lot size calculator proceeds as follows:

• Lot size Size in terms of lots = (Dollar Amount of Account Risk) / (Pip Value x Trade Risk)

If your account is USD-funded and the dollar is the quote currency, then the pip value is equivalent to:

• \$0.10 for a micro lot of \$1,000
• \$1 for a mini lot of \$10,000
• \$10 for a standard lot of \$100,000

In the previous example, we had a \$10,000 account. Thus, the trade risk was \$100 per exchange. Moreover, we bought the NZDUSD at 0.6790 and placed a stop-loss at 0.6810. Thus, the trade risk was 20 pips. Finally, applying the lot size formula, we get a forex MT5 position of five mini lots. To explain, the lot size calculation was as follows:

• Forex lot size = \$100 / ( 1 x 20 ) = 5 mini lots

In conclusion, this MT5 position size calculator indicates a high leverage requirement for this trade.

Moreover, this MT4 indicator is an automatic lot size calculator. In fact, it performs lot size calculations automatically. To explain, key information as your account size is already available in the MetaTrader platform. The figure below presents the main position size parameters.

Position size calculator in MT5 provides you with faster and more accurate lot calculation in Metatrader 5. That is why a lot of traders tend to use them. In fact, calculating lot size manually would result in wrong results. Moreover, it is a slow computation process. That is why traders need a lot size calculator for the MetaTrader 5 platform. To explain, this lot size calculator for MT5 takes into consideration:

• Account risk as a risk percentage of your balance
• Trade risk through stop-loss levels
• The taken risk and your recompensation.

In short, our position size MT5 calculator will quickly calculate the accurate lot size for your trades. Also, it computes the potential loss to income. Then, it plots this useful information on your MetaTrader 5 chart.

A position size calculator for Tradingview is a user-friendly tradingview tool. To explain, it computes the lot size taking into consideration the account balance and other risk parameters. Then, the calculator quickly plots the lot size on the Tradingview chart. In addition, risk parameters are Risk/Reward founded. To clarify, they are based on user-defined values such as risk percentage, entry and exit prices, stop-loss levels, and profit targets. Thus, feel free to modify inputs from the Tradingview settings.
Below is an illustration of the position size calculator on the Tradingview platform.

### Conclusion

Every market trade position is resolved via three steps. First, there is account risk determination. Second, there is trade risk determination. Third, we get the proper position size with this automatic calculator in your MT5 chart.

Note that the lot size calculator in the MT4 platform is a famous risk management tool. Because it assists you to control risks in order to maximize outcomes. Besides, it’s highly recommended to spot trades in the process of position sizing.

### Key takeaways

The position size tool is a lot size calculator for MetaTrader platforms that permits to:

• Compute the accurate lot size based on the account balance and risk parameters.
• Develop trading systems and forex systems based on it.
• Manage volatile markets and short-term trading horizons. Thus, a lot size calculator is a risk management tool.