Hi All !
Forgive my ignorance, how the lot size is calculated in MT4? Its very easy to see in Oanda but I am getting confused here in MT4 and seek your kind help.
For example, if my account size is $5000 and leverage of 500 and I want to risk 20% of my account (that is $1000. If I multiple it with leverage of 500, it gives 500,000. NOw when I am entering into a position, what I should use in lots volume ?
Thanks for your kind help.
It is not possible to calculate lot size based only on the amount of money which you can afford to lose.
Lot size also depends on the number of pips which you can lose, so to calculate lot size you need to know Stop Loss level in pips.
For example if you decide that your Stop Loss will be located 100 pips away from the entry price then you would use one lot size and if you decide that your Stop Loss will be located 50 pips away from the entry price then you whould use another lot size which is 2 times bigger than the lot size of the order with SL=100pips, risk amount in money will be the same for both cases.
General formula how to calculate lot size is:
<lot size> = (<Size of your account> * <risk percentage> / 100%) / (<Stop Loss pips> * <pip value>)
Read more: 301 Moved Permanently
Hi Programmer 
Thanks for your kind reply. Yes I do know that stop loss is used in calculation of lot size. I’ll re-phrase my question now with an example :):
My account size is $1000, I want to risk 20% and my stop loss is 50 pips. I am using leverage of 500.
[B][U]Question 1:[/U][/B]
What should be my lot size based on the risk % (I can calculate it though babypips lot size calc) but I am using leverage of 500. So is this the correct calculation incorporating leverage :
= [ ($1000 x 20%) x 500 ]/50 pips = 2000 units
[B][U]Question 2:[/U][/B]
If the above is correct, then when I will enter into a position, what should I use in Volume ? Should it be 0.02 ?
Thanks for your kind help.
Your forgetting the most important element of your calculation.
What pair are you trading.
For example, 1.0 standard lot in pairs where the cross currency is USD, such as GBP/USD & EUR/USD is equal to $10.00
But it does not equal $10.00 in pairs where the cross currency is not USD. For this you need to convert your base currency pair into your account balance denomination currency to work out the correct lot size to be trading. There is a lot size calculator on this website to help you do this though should you get confused.
Thanks for your reply Jezzode !
Yes assume it is EUR/USD and the account currency is USD.
My account size is $1000, I want to risk 20% and my stop loss is 50 pips. I am using leverage of 500.
Question 1:
What should be my lot size based on the risk % (I can calculate it though babypips lot size calc) but I am using leverage of 500. So is this the correct calculation incorporating leverage :
= [ ($1000 x 20%) x 500 ]/50 pips = 2000 units
Question 2:
If the above is correct, then when I will enter into a position, what should I use in Volume ? Should it be 0.02 ?
Thanks for your kind help
Seriously Shawn?!? Are we really covering this again? Out of the 13 threads you’ve started, 5 of them are regarding position size.
As you’ve been told before, leverage has absolutely diddly squat to do with position size, it’s of zero relevance so just take it out of the equation & use the BabyPips position size calculator. The calculator doesn’t ask about your leverage setting for a reason: it has no effect on the position size’s out come. All that is important is the information that it asked for.
http://www.babypips.com/tools/forex-calculators/positionsize.php
Account Currency = USD
Account Balance = $1,000
Risk Percentage = 20%
Stop-Loss In Pips = 50pips
Currency Pair = EUR/USD
So you’ll be risking $200 & to do that with your SL you need 40,000 units which is a 0.4 position size.
The only reason leverage would be relevant is if the margin required to open that position size is more than his account balance. With 500:1, it’s not a problem, but try 50:1 and it will be. Just sayin 
Thanks Baz1982.
OK leverage thrown out of the window permanently and from the mind too :p.
Thanks for your kind help.
Don’t ‘throw leverage from your mind’, it’s important, too (if not for your pos-size calculation).
Speaking of leverage: 1:500 is not such a good idea, it’s way too high.
And working with a 20% risk makes me shiver.
20% risk in combination with 1:500 leverage is like dipping yourself in honey and then approaching an angry grizzly, saying ‘Hi wimp’.
You might want to think about adjusting a bit, hehe.
Cheers,
P.