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Best Position Size Calculator: Tutorial and Download

Updated: Feb 18, 2021

When it comes to Forex trading, knowing exactly how 'big' or 'small' your risk should be on each trade is important as predicting the direction of the trade itself.

This is where understanding how to position size correctly is imperative to your trading success.

In this article, we will cover:

  • The concept of position sizing with "Lots"

  • How to properly manage your trades in Forex.

  • Explaining what margin is in forex.

  • The hidden truth about your brokers' agenda behind leverage.

  • Giving you a guide to how much money you will need to start your trading journey.

Position Sizing with Lot Sizing

The general definition of lot size:

"Lot size refers to the quantity of an item ordered for delivery on a specific date or manufactured in a single production run. In other words, lot size basically refers to the total quantity of a product ordered for manufacturing."

But how does this apply to FOREX?

Currency Units tell us how much currency we are going to buy or sell in the market. Forex is commonly traded in specific amounts called lots, or basically the number of currency units you will buy or sell.

If you buy a currency with a 1 lot size you are purchasing 100,000 units of that currency.

Naturally, if you want to become a successful trader you must know this information and be able to apply it on a daily basis...

Don't panic though, we will explain it in detail soon enough, plus, we have lots of different resources to help you along the way...

The different lot sizes

How do lot sizes help my Trading?

The forex lot size that works well for you is really dependent on a number of factors based on how you want to trade.

You need to know how much money you will be trading with, this is called capital.

Risk management is key when using lot size as you need to be able to maintain your positions. you need to know how much of your capital you actually want to risk at any one time.

At Logikfx we would recommend no more than 3% but the decision is ultimately yours.

If you purchase too many units of a currency this may become overwhelming for your account and it will be shut down by your broker.

Leverage is a key factor in working out the best lot size for you as it allows you to effectively borrow money and inflate your capital allowing you to buy more currency, however, leverage can be very dangerous as we will explain further down the article...

Proper trade management in FOREX

Here I will show give you an example of how all these factors come together in an actual trading scenario...

Key definitions that you will need to know for this example

Logikfx Position Size Calculator Excel Tutorial

What is margin?

Margin is the amount of money a broker wants you to put down in order to use leverage, like a deposit.

"Margin is not a cost or a fee, but it is a portion of the customer's account balance that is set aside in order to trade."