Download Position Size Calculator for Metatrader 4:
How to install Position Size Calculator for Metatrader 4:
In Metatrader4 open File menu (left top) and select Open Data Folder. You should see a new window with MT4 folders and files. Something similar to the screen below:
Go to unzipped folder. Move content from MQL4/Indicators to the same folder in MT4 window.
What is a position size calculator?
It is a calculator that calculates the position size of the position you should open.
When calculating the position size it takes into account the stop loss position and the risk you want to take with the transaction. This way you can be sure that when the stop loss is activated the loss will be consistent with your risk management (e.g. 1 percent).
Position Size Calculators and bad Risk Management
Position Size Calculator helps to remove the most serious errors in Risk Management. Not only beginner traders make them. These errors can be divided into two groups:
1) bad risk management for the whole account
Many traders do not understand the 1% risk rule. They open every position with the same 1% stop loss. However, if they open three trades, each with a 1% risk, their risk is the sum of the three trades.
The real risk with several trades is very difficult to track. That is why scripts like the position size calculator are helpful here. They calculate the risk for the whole account based on all open positions.
2) Bad risk management for a single position
The 1% risk rule is generally simple, but is often misapplied in practice. Let’s look at two types of approaches to the same 1% risk transaction:
- The trader opens a position at 1.14 level with a size of 3 lots. He calculates that based on the account size and the position size, his 1% loss will be 20 pips from the point of opening.
- Trader 2 wants to open a position at 1.14. He sees that the last hole was 50 pips lower. He believes that the best stop loss will be somewhere around 70 pips, just below the last hole. He calculates that for his loss at this point (70 pips lower) to be 1% of his account, he must open a 0.8 pip position.
Second trader has the correct approach. You calculate the position size based on the stop loss position.
What else to remember when managing risk?
An important remark applies to 1% itself. This is the best risk for many traders, but it does not necessarily mean that you have to apply 1% risk. There are traders who decide to take an even smaller one, e.g. 0.25, 0.5 percent per transaction. There are others who like to take a 2% risk. There are so many different systems and strategies for swing trading, day trading that you have to check yourself on historical data what risk profile is best for your trading style.
What is a position size calculator?
It is a calculator that calculates the optimum position size of a position so that the risk is within 1% or another given value.
Can I use other risk than 1%?
It depends on your strategy. If you think that the risk would be better, e.g. 2%, then you should check the historical data to see what results it has produced with your strategy.
How do I calculate the risk when I have several positions open?
You should take into account the maximum potential loss from all open positions and then calculate what is the risk in terms of amount and percentage. This is quite difficult to do on your own so scripts like the Position Size Calculator are helpful here.
Is the risk calculator built into Metatrader 4 (mt4)?
Unfortunately not. However there are many free scripts that will allow you to calculate the risk. Just download – e.g. from here – and install in Metatrader 4.