Forex traders the world over have every reason to be happy. The latest risk management tool is now available. And, the best part is it is accurate and free. The Position Calculator is the latest addition to a forex trader’s arsenal of money management tools to help him mitigate the uncertainties involved with foreign currency trading. These tools are readily available as free online calculators that can be accessed anytime through some online broker sites; or, as a downloadable Metatrader plug in which you can easily install on your Metatrader trading platforms.
Everyone is aware of the many uncertainties in foreign currency trading that puts a trader constantly at risk. Also, a trader worth his salt understands fully well that leverage magnifies these risks a hundred fold. To mitigate these risks requires the use of prudent risk management strategies that incorporate comprehensive money management tactics. Proper position sizing has always been the key to successful risk management strategies. Prudent money management starts with it. The advent of position calculator is simply going to make the task easy for everybody.
Forex traders have always been creatures of habit. They always trade using a round number of lots they have gotten used to starting with. Worst, because of their inflated egos many of these traders get themselves into a deeper hole. Because of some misplaced pride or at times inflated egos, traders often find themselves hesitating to take a loss hoping the price will soon turn in favor of their positions. They often allow small losses to run until they reach account ending margin call points which are all too often too late to do anything about.
A position calculator is the perfect solution to all these trader woes. It helps traders minimize the risk right at the onset by calculating the maximum number of lots he should trade based on the % of the capital the trader is willing to risk for each trade. All trading stops will then be determined accordingly thus limiting the losses only to what the trader is willing to put on the line. This way, traders are able to minimize losses which leave them sufficient capital to make other trades.
Doing position sizing using an online position calculator takes only a minute of your time. But this one minute of your time can spell the difference between getting yanked out of the market due to a margin call and surviving for another trade and be able to recoup losses and ending the day on a positive note.
A position calculator also helps to instill the much needed discipline that every forex trader should have. It takes out the mindset of a high rolling gambler who does not have control over the risks he takes. It makes a trader a better foreign currency speculator not a high stakes roller in a casino. Prior to the advent of this money management tool, most forex traders rely a lot on their gut feel which are nothing more than what we call as gambler’s instincts. This tool brings the forex trader to a higher level of speculation.