Risk Management in Forex Trading: Lot Size Calculation for a 100K Funded Account

Hey everyone!

I received an interesting question from a Discord member, and I think it’s an excellent opportunity to share some insights with all of you. Here’s the question:

“can you explain to me how to work out lot size? I’m going for a 100k funded account and will be risking 1%. So how would I know which lot size to use?”

Great question! Proper risk management is crucial in forex trading, and understanding how to calculate the appropriate lot size is a vital part of it. To make things easy, I personally use an online risk management tool like the Position Size Calculator on Myfxbook: https://www.myfxbook.com/forex-calculators/position-size

In your case, you have a 100k funded account and want to risk only 1% per trade. Here’s a step-by-step guide on how to use the Position Size Calculator to determine the appropriate lot size:

1. Account Currency: Choose the currency of your trading account.
2. Account Size: Enter your account size, which in this case is 100,000.
3. Risk Ratio, %: Input the percentage of risk you’re willing to take on each trade, which is 1% for you.
4. Stop Loss, pips: Enter the number of pips for your stop loss. This value depends on your trading strategy and should be determined before placing a trade.
5. Currency Pair: Select the currency pair you’re trading.
6. Contract Size (1 lot): This field is pre-filled with the standard lot size for the chosen currency pair.

After entering these details, click the “Calculate” button. The calculator will then display the appropriate lot size based on your inputs. Remember, this lot size will ensure that you only risk 1% of your account on any given trade.

Using tools like this Position Size Calculator helps to simplify the risk management process, allowing you to focus more on your trading strategy and execution. Just be sure to stick to your risk management rules and always use a stop loss to protect your account.

I hope this helps! If you have any further questions or need clarification, feel free to ask. Happy trading!