# How to use the lot size calculator

1. Select your currency pair

2. Select your account base currency

3. Enter the amount to risk

Enter stop loss distance in pips

# Why use a lot size calculator?

Using a lot size calculator in forex trading offers several benefits that can contribute to improved trading performance and better risk management.

**Accurate lot size calculation**

It helps you accurately determine the number of units or lots you should trade, based on your account balance, risk tolerance and stop loss levels.

**Effective risk management**

By inputting these specific parameters, a lot size calculator helps you determine what lot size you should trade to not exceed the amount you are willing to risk. Ensuring that you take positions that align with your trading strategy.

**Make informed trading decisions**

Knowing the appropriate lot size, you can better assess your potential profits, losses, and associated risks from each trade.

# How is the lot size calculated?

The appropriate lot size to trade is calculated by dividing the amount to risk by the distance of where you intend to put your stop loss in pips. This will calculate the value that each pip should be worth in order to not exceed this risk tolerance. The formula would be as follows:

**Pip Value = Amount to risk / Stop loss distance in pips**

Once you know the value of each pip, the corresponding lot size to trade can be calculated.

For example, if you are willing to risk $100 on a trade and you intend to put your stop loss 50 pips away from your entry price, the calculation will be as follows.

**Pip Value = $100 / 50 = $2 per pip**

The appropriate lot size that has a pip value of $2 can then be calculated, which would be two mini lots (0.2) or 20,000 units.

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