Lot Size Calculator: Learn Calculating Trade Size in Seconds

Do you also struggle to calculate lot size in forex? Learn the process of how to use a lot size calculator, and determine the trade size in seconds.

Forex trading is the game of time and speed. No one can stop a trader from success who has a command of these two elements. Timely trades are placed due to speed, and that speed tools give.

The Forex lot size calculator is the most useful tool that boosts traders’ speed. However, many traders can face complexities when using it. But do not worry; in this article, we will provide a detailed overview of lot size and its calculation. So, let’s get started.

What is a Lot Size?

The lot size refers to measuring units of currencies at which currencies are traded in the financial market. It refers to the amount of currency units traded in a single transaction

Like eggs are bought and sold in dozens, currencies are bought and sold in lot sizes. Below are the four major types of lots in forex:

Standard: 100,000 Units

Mini: 10,000 Units

Micro: 1000 Units

Nano: 100 Units

What is a Forex Lot Size Calculator?

A lot size calculator is a tool to determine position size by entering trade key information. Calculating lot size is a lengthy procedure; it can delay your trade execution.

Also, one error can affect the overall results. Thus, a calculator is available online, which allows traders to calculate the lot size easily. Generally, a trading platform such as Meta Trader 4 and Meta Trader 5 provides such tools. You can even get these tools on different forex broker sites for free.

Components for Lot Size Calculator

Currency Pairs: A forex pair refers to a combination of two currencies traded against each other. For lot size calculation, you must determine the pair you want to buy or sell at a particular period.

Account Size: It refers to the funds, capital or balance you have in your account.

Risk Per Trade: You need to determine the risk percentage or the amount you can risk per trade from your account balance.

Trade Entry and Exit Levels: The price at which you are willing to open or close a trade position.

Stop Loss Pip: Stop loss is generally defined as the level at which you exit the trade at a limited loss. You need the number of pips you can afford to risk for lot size calculation.

How to Calculate Lot Size

Choosing the right Forex lot size calculator is crucial, as it determines risk exposure, margin requirements, and potential profit or loss. Lot size can be calculated manually or by using a calculator. A trader should use calculators while making trade decisions. However, for a better understanding of the concept, a trader should know to calculate the lot size manually. To help you out, below is an example of lot size calculation manually:

Let us say a trader has a capital of $50,000 in the account, and the risk percentage is 1% per trade. The trader has identified an opportunity in the GBP/USD pair. The stop loss is 250 pips, and the pip value of a standard lot is $10.

Lot Size = (Account Size * Risk %)/(Stop-Loss in Pips * Pip Value)

Lot Size = (50,000 * 1/100)/(250*10)

Lot Size = 0.2 lot

How to use Lot Size Calculator

Now you know how to calculate lot size manually. However, lot size calculations are not that simple in all cases. Complex trade number makes the calculations far more complex and time-consuming. But don’t worry; you don’t need to do such calculations. A calculator will do this for you. Here is how:

Go on a search engine and type lot size calculator. You will get a number of websites that provide the tool for free. Select any one of them.
Enter currency pair, account balance, entry price, risk percentage, and stop loss pips.
Click on calculate, and the tool will give you the lot size of a trade.

Benefits of Using Lot Size Calculator

Lot size calculations already have many advantages, and when you use lot size calculators, the benefits further increase. Here is how lot-size tools can help traders:

Risk Management:

The major reason why advanced traders prefer calculating lot size is risk management. Traders already know how much they can afford to lose or the expected gains. They can even make the necessary changes in trading accordingly. Ultimately, traders can control the losses per trade with a lot size calculator.

Time-Saving:

Lot size calculators save traders a lot of time. During this time, a trader can do tasks that require more human attention, such as market monitoring or analysis.

Long-Term Survival:

In the forex market, the main reason for the high failure rate is a lack of informed decisions. Generally, traders see a trade from a short-term perspective and make decisions accordingly. However, lot size calculations provide an overview of your account that considers future perspectives. So, the chances of long-term survival and success are high for traders.

Capital Management:

Many people think you need big capital for trading. But the truth is you need to make the right use of capital, and lot size calculation will help you do so. When using margin and leverage, a trader needs to maintain an amount in an account. Traders may end up blowing their trading accounts if they fail to maintain the required margin. Lot size calculations will help you manage your trades while considering your capital.

Trade Customization:

Lot size calculation will provide an overview of your trade with expected profit and loss. So you can determine the impact of the trade on the account. By analyzing the account, you can even make the necessary changes in your trade, such as adjusting risk to reward, leverage or stop loss levels.

Conclusion

Tools such as a lot size calculator can make forex trading quite a smooth process. Even after that, only a few traders use them. Little effort can help you make the best use of your trading capital. At present, numerous advanced tools are available for free. You just need to keep yourself updated and well-versed with the trading tools.

As a reputed broker, Beirman Capital wants the best for its clients. Open an account with us and enhance your trading journey.

FAQs

How do you calculate the best lot size in forex?

Lot size in forex can be calculated with calculators or manually using the formula (Account Size * Risk %)/(Stop-Loss in Pips * Pip Value).

What lot size do professional traders use?

Professional traders generally use a standard lot size that contains 100,000 units of currency.

How much is a 1.00 lot size in forex?

1 lot size represents a standard lot in forex that consists of 100,000 units of currencies.

How much is a 0.01 lot size?

0.01 represents a micro lot that consists of 1000 units of currencies.