#272: Accurately calculate your position size

Online Forex Trading Course

Podcast: Accurately calculate your position size In this weekly video: 00:26 – Calculate your lot size easily 00:54 - Many traders misunderstand the importance of this 01:29 – Every trade has an equal and known risk 02:33 – How to calculate your risk – there are many factors 03:13 – Get my Calculator for free 04:45 – Changing your thought process Would you like to know how to accurately calculate the position size that you need on your trade in order to keep your risk low? Listen up, I've got some great news. Hi Forex Traders, Andrew Mitchem here, the Forex Trading Coach Video and Podcast number 272. Calculate your lot size easily I'm going to explain how you can accurately and easily calculate the lot size or the position size that you need to place on each and every one of your trades in order to help you trade better, to help you with your psychology, and to help keep your risk per trade low and equal regardless of the trade, the size of the stop loss, or the timeframe. So I'm sure you'd like to know how to do that. Many traders misunderstand the importance of this Well, before that I'm just going to read an email that came through here and it said, "I loved the video that you did on the risk calculator, but could you explain more? I think it's a massive misunderstanding amongst many traders, and the way you explain it makes so much sense to me. Can you make another video so I can get a better understanding?" That's quite interesting that the person says that most people have a massive misunderstanding, and I think it's absolutely true. That is a big, big problem amongst Forex traders. Every trade has an equal and known risk So the way that I trade is every single trade that I take has an equal and known risk. So people get too worried about what the stop loss needs to be and how many pips that is; it doesn't really matter. By getting your mentality away from thinking about making profit or loss in pips, what it does is it gets you thinking like a professional trader who thinks in terms of your risk to reward, win rates, and controlling risk per trade. Every single trade that I take has the same amount of risk; the same percentage of my account at risk regardless of what currency pair it is, what the timeframe chart is, whether it's a longer term trade, a short timeframe trade, doesn't matter. They all have equal risk. That helps me to trade with less emotions. All the trades I've got going behind me here, every single one of them, is controlled. How to calculate your risk – there are many factors So if a number of them go wrong it doesn't really matter, because I have the risk controlled and I know that on my profitable trades I have high reward to risk. So how do you do it? Well, as you would likely know, and if you don't you soon will, each currency pair pays out a different amount per pip. So the manual, old fashioned way of doing this is quite slow and it's quite difficult and it takes a fair bit of calculation. Because it also depends on what your account is denominated in. So as an example, if you have a US dollar account or a British pound account or an Aussie or a Kiwi dollar account, whatever it might be, the amount that you get paid per pip of movement up and down is different depending on your account. Get my Calculator for free So I have an amazing lot size calculator; it's freely available and I have placed ... Or will be placing, a link below this video and podcast so you can download it for free. Let me explain how it works. Rather than going through that whole complicated calculation, you don't need to do any of that. All you do is you drag the script, it is a script not an indicator, so when you download it and you start coming back to me going, "Andrew it doesn't work," it's a script. Don't put it under indicators. So you drag the script onto the chart that you're about to trade. So let's say you're about to trade the Euro/US dollar.