Position Size Calculator Indicator For MT4 And MT5 - MT4Gadgets (2024)

In this article you will learn more about the Position Size Calculator and the Indicator for Metatrader that makes it easy to see it on chart.

What Is The Position Size

As we mentioned in the article about Risk Reward Ratio, when trading Contracts For Difference (CFDs) it is not always easy to understand the risk of a trade.

It is also often confusing to trade Forex and other assets working with lot sizes as positions instead of monetary values.

Let’s give a quick look at CFDs first.

Trading CFD

Retail traders normally trade the following instruments via CFDs:

• Forex
• Metals
• Indices
• Commodities
• Cryptocurrencies

This is especially true when trading via the popular trading platform Metatrader.

Trading via CFD makes it really easy to retail traders to get access to assets normally traded by institutions.

One thing that must be clear that CFDs are instruments that follow the price of the underlying asset without actually settling on the the underlying asset.

For example when you trade long or short EURUSD you are only “betting” on the price going up or down, without actually buying or selling the currency.

The same way, if you are going long or short on Gold or Petrol, you are only trying to profit from the price movement, without buying or selling the asset.

If trading via CFD is clear we can move forward.

Lot Size

When trading Forex and CFDs in general the position is not expressed as a monetary value, but rather in lot size.

Lot Size, or Position Size, is the quantity of units you commit in the trade, with usually 1 LOT = 100,000 UNITS.

So in other word, the position size is the quantity of the instrument you are trading.

Normally the position size of most brokers can span between 0.01 up to 100 lots, with an incremental step of 0.01.

However, different brokers can have different limits and steps.

Pip Value

Another fundamental concept to understand when trading CFDs is the Pip Value.

We covered it extensively in this article.

In short, the pip value is the monetary value of the smallest price fluctuation of an exchange rate.

The pip value depends on the instrument and on the position size.

What Is The Position Size Used For?

The Position Size is one of the key components of risk management.

The Position Size combined with the Stop Loss give you the maximum amount you are risking in a trade.

Risk management is crucial in trading and can make the difference between a profitable trader and non profitable ones.

When trading you need to be able to manage your risk in order to be able to face losing streaks.

You may have heard of the 1% or 2% rule, where you can risk max 1% or 2% of your account in every single trade.

Because it’s likely that you will have winning trades and losing trades, risking a limited amount in each trade allows you become profitable in the long term.

Risking too much in a trade could result in blowing an account.

Using a calculated position size allows you to limit the risk to a desired level.

Let’s try to put together all of the elements.

How Do You Calculate The Position Size?

Calculating the Position Size is not hard but also is not quick in some cases, that is why a Position Size Calculator can be very helpful.

The Position Size is calculated using different factors:

• The pair, or asset, that you are trading
• The leverage you may be using
• The Stop Loss
• The currency your trading account is funded with

All of the above factors come together and contribute to the value of every price movement and they can make the calculation confusing.

Risk Calculation Formula

Since the position size is based on risk and usually Risk is the main element we can see the Risk Formula first.

RISK = PIP VALUE x POSITION SIZE x STOP LOSS

Where:

• Pip Value (or better, Point Value) is the minimum monetary fluctuation of an exchange rate for a position of 1 lot
• Position Size is the number of lots traded
• Stop Loss is the distance between the open price and stop loss price, in points

Position Size Calculation Formula

When trading you normally have quite clear how much we are risking in a specific trade.

The risk per trade should be part of your strategy and trading plan, failing to have a defined risk is usually a recipe for disaster.

Risk is in most cases one of the following:

• A fixed amount, for example 100$ or 2000$, an amount that doesn’t change
• A % of your balance, for example a popular one is 2% of your balance, so a 2% of a 10,000 USD account would be 200 USD
• A % of your equity, same as above but based on your equity instead of the balance

There is no right or wrong answer, different strategies may have different risk.

Remembering the formula of RISK above it is easy to move around the elements, with the result of the following Position Size Calculation Formula.

POSITION SIZE = RISK : (POINT VALUE x STOP LOSS)

So the position size is the result of the risk amount divided by the pip value multiplied by the stop loss in points.

Position Size Calculation Example

Let’s see with an example.

You are trading EURUSD on a 30,000 USD account, you know you want to risk 2% in the next trade.

The trade you are planning is a Long entering at 1.05900 and a stop loss at 1.04900.

You have all the data you need:

• RISK = 30,000 USD x 2% = 600 USD
• PIP VALUE = let’s use the POINT VALUE = 1 USD per point for a position of 1 LOT
• STOP LOSS = 1.05900 – 1.04900 = 0.01000 = 1000 POINTS

So in this case the Position Size Calculation is

POSITION SIZE = 600 USD : (1 USD x 1000 POINTS) = 0.6 LOTS

As you can see the calculation isn’t rocket science and only needs a few parameters.

However, when trading you probably don’t want to waste time finding the risk and calculating the stop loss in points and checking the point value.

That is why a tool that calculates the Position Size can make the trading quicked.

What Is the Position Size Calculator For Metatrader?

As you read above, the calculation of the Lot Size isn’t too hard but requires to find a few parameters first.

The MT4 and MT5 Position Size Calculator indicator is a tool for the Metatrader platform that does is all for you.

You can specify you risk in the parameters and set the stop loss directly on chart.

The Position Size Calculator for MT4 and MT5 directly calculates the Lot Size for the trade and shows it on chart.

Further than that you can work with the Stop Loss, Open Price and Take Profit to see how the lot size changes in real time.

You can also see the possible risk (amount lost if hitting stop loss) and reward (amount earned if hitting take profit).

The Position Size Calculator Indicator for MT4 and MT5 is a tool that allows you to easily see the recommended lot size for a trade given the desired risk.

The Position Size Calculator Indicator is designed to be easy to use and understand.

You can load the indicator directly on the chart and it will show the lot size for a default risk and stop loss.

You can change the default risk and stop loss in the parameters and even change the stop loss and open price in the panel to see the new recommended lot size.

The Position Size Calculator Indicator works with all of the following assets:

• Forex Currency Pairs
• Precious Metals like Gold and Silver
• Indices quoted by the broker
• Commodities like petrol
• Cryptocurrencies, if available in your broker
• Stocks, if available in your broker

Position Size Calculator Indicator For MT4 and MT5

You can download Position Size Calculator Indicator for MT4 and MT5 for FREE from the following pages.

Please note that Position Size Calculator is an indicator for the Metatrader Platform and you will need to have the platform already installed to use it.

The indicators are available for Free Download, links below.

The indicator is easy to use and allows to do everything through drag and drop on chart.

If you wish to try the new tool with One Click Order feature please check this page.

You can download the following indicators from the respective pages in the links below:

• MT4 Position Size Calculator Indicator Download
• MT5 Position Size Calculator Indicator Download

Summary

In this article you learned more about the definition of Position Size, also called Lot Size.

You also understand what it is used for and how to calculate it.

A clear understanding and use of Position Sizing is vital in risk management.

We shared the Position Size Calculator indicator for MT4 and MT5 and provided download links

If you wish to provide feedback or for any help please Contact Us.