Position Size Calculator

Hi all,

I am pretty new to this forum and I’m sorry if what am I asking here has been asked somewhere in this forum as well.

So here is the question:

Let’s say I am trying to place a stop order for GBPJPY @ 140.100 and its current price is at 140.150 using USD as my account currency.

When I have selected the currency pair on the position size calculator, it’s asking me for the USDJPY asking price and if I do key in its value, my lot sizing will be slightly off isn’t it since my stop order on GBPJPY might take days to be triggered and the calculator is asking for the current USDJPY asking price.

Is there a better way for me to use the calculator? Thank you.

There is a time-factor which the Position Size Calculator cannot account for.

In the case of a stop-out days or weeks in the future, the USD/JPY conversion rate at which your trade is settled can be significantly different from the rate you entered into the Calculator just prior to opening your trade.

This will not change your position size, but it will change the USD-value of the loss you suffer at stop-out. Your loss could be slightly more, or slightly less, than the percentage you intended, when you planned your trade.

Day-traders and short-term traders generally ignore these slight variations in the intended risk amount. Even swing-traders tend to ignore them.

You can calculate the effect of a change in the USD/JPY rate, on the actual loss incurred at stop-out. You will find that an x% change in the USD/JPY exchange rate will produce an x% change in the dollar-value of your loss at stop-out.

If the USD/JPY rate increases (from 110.00 to 112.00, let’s say) while your trade is open, you will profit from that increase – your settled loss after stop-out will be about 1.8% less than the risk you initially thought you were taking. (The increase in the USD/JPY rate assumed here is about 1.8%.)

If the USD/JPY rate decreases (from 110.00 to 108.00, let’s say) while your trade is open, you will suffer a 1.8% larger dollar-loss at stop-out, than the risk you initially thought you were taking. (The decrease in the USD/JPY rate assumed here is about 1.8%.)

Note that 1% changes (or greater) in the exchange rates of the major pairs, and of the major crosses, do not normally occur over hours, or even days. But, such changes can certainly happen on longer time scales. So, significant changes in the amount actually at risk in trades held for long periods can be a matter of concern for position traders.

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This Forex calculator provides you with a position size in standard lots based on the variables that you enter. The account currency field will correspond to the currency which you use in your trading account. So if you are based in the U.S., this will likely be USD, whereas if you reside in the UK, you would choose GBP. This position size calculator is a free tool that allows you to calculate the size of the position in units and lots. This will be very helpful to manage your risks more wisely as you will be more informed. This calculator works with all major currencies. It requires the minimum input values, but allows you to customise it according to your specific needs. All you have to do is complete the form below and then press the Calculate button.