Many retail traders find themselves lost when it comes to calculating the appropriate position size. With babypips, you can easily calculate your proper position sizing using Babypips position size calculator when trading Forex and other financial markets. Babypips is a free blog and forum site with other automatic calculators like Pip Value Calculator and Pivot Point Calculator.
What is position sizing in forex?
If you are a forex trader, your lot size is one of the most important things to consider. However, choosing the correct lot size can be difficult because so many factors go into it. But the lot size calculator can help you do all the tasks automatically. In this post, we will explore how to determine your ideal lot size using babypips position sizing calculator.
How is position size calculated?
Every forex trader has a different strategy when it comes to position size. Some traders are risk-averse, preferring to trade in smaller increments with less chance of losing their entire trading capital. Other traders are more aggressive and prefer to use more significant positions to maximize profits. However, regardless of your risk tolerance, there is one thing that every trader needs to know for risk management: how position size calculation works!
The most accurate way for determining the appropriate position size is by using what’s called the “Risk Factor.” This means that the desired trading unit should be multiplied by its corresponding Risk Factor in order to generate an accurate estimate of total potential loss per transaction. The best rule of thumb is not to risk more than 1% on any given trade.
Suppose you deposit 3000 EURO to your trading account.
You wish to open a trade on EUR/USD (where EUR is base currency and USD is counter currency) placing 200 pips stop loss
and today’s EUR/USD exchange rate is 1.4000
Your strategy says you to risk 1% on every trade.
EUR 3,000 * 1% = EUR 30
As the value of the currency pair is calculated by the counter currency so now we have to convert this to USD
(USD 1.4000/EUR 1.0000) * EUR 30= USD 42
Now we will divide this value with our stop loss
42/200 = 0.21 a pip move
Now we will multiply 0.21 by the most common unit-to-pip value ratio
(USD 0.21 per pip ) *[ (10 k units of EUR/USD)/ (USD 1 per pip )]= 2100 units of EUR/USD
So for risking 30 EUR on a 200 pips stop loss, your position size would be 2100 units.
Have you got confused? Don’t worry; there is a forex lot size calculator for you! So You don’t need to overthink. What is the position size? What is the unit size position? Etc. Automatic computer technology and robotic calculation process made whole things easy for us.
Babypips position size calculator
You can easily get your babypips position size calculator from here, so don’t search for a position sizing tool or calculator download. You don’t need to download anything. Everything is online now.no extra hassle. it doesn’t matter whether your platform is mt4 or mt5; you can use this calculator both to position size calculator mt4 and position size calculator mt5.
Although most of the traders and technical analysts use babypips calculator, there is alternative also. If you don’t want to use the babypips position size calculator, go for myfxbook position size calculator. You will find here more features than babypips.
Indices position size calculator
If you love indices & Dow Jones much and trade US 30 randomly, you need to go for the FXDD calculator . in FXDD broker’s us30 lot size calculator, you can easily calculate your Dow Jones. you won’t get this feature in babypips position size calculator
We can’t do everything manually. We don’t have such enough time. So taking help from tools is not bad at all. Now it’s quiz time!