A Position Size Calculator is a tool used in trading to help determine the appropriate size or quantity of a position to take in a financial instrument (such as stocks, forex, or commodities) based on certain parameters. The goal is to manage risk and ensure that the potential losses are within acceptable limits.
With a few simple inputs, our position size calculator will help you find the approximate amount of currency units to buy or sell to control your maximum risk per position.
Proper position sizing is key to managing risk and avoiding blowing out your account on a single trade.
To use the position size calculator, enter the currency pair you are trading, your account size, and the percentage of your account you wish to risk. Our position sizing calculator will suggest position sizes based on the information you provided.
Position Size Formula
Here’s a simple formula for calculating position size:
Let’s break it down:
- Account Size: This is the total amount of capital in your trading account.
- Risk Percentage: This is the percentage of your account that you are willing to risk. For example, if your account size is $10,000 and you decide to risk 1% per trade, you are risking $100 on a single trade.
- Stop Loss Distance: The difference between the entry price and the stop-loss level. This tells you how far the market can move against you before you exit the trade.