Metatrader is one of the most popular trading platforms used by a lot of online forex brokers. It is user friendly and can be customized to suit the needs of every broker and trader that uses them. Aside from the built in indicators this trading platform has, software users are free to develop applications that can be used and interfaced with this platform. And the latest API that was developed for use with the Metatrader is a money management tool called a position calculator. Installed as a plug in and used like any other indicator, the Metatrader position calculator is a great tool to manage risks and minimize losses.
Like any other indicator, the results of the calculations made by this tool will be reflected as lines that are laid over a live chart of the currency pair you are trading. This enables the trader to do easy referencing during actual trading. Based on the inputs you set prior to opening the position, the position calculator will then determine the actual price level at which point your loss will be equal to the percentage of risk you are willing to take. This will then serve as your cut loss point and it will be displayed as a line running across your live chart. With just one look, you’d be able to see how your position is doing relative to the current price and your tolerance level.
The best part is you have the flexibility to set your risk tolerance in terms of a percentage of your capital (the default is 2%) or you can set it in terms of the number of pips (default is 20 pips) which you are willing to take. The built-in position calculator will make the fast calculations and then draw the corresponding lines automatically. You will always know where and how you stand relative to the current prices.
The Metatrader position calculator benefits a trader in a lot of ways. Once set up, calculations are done fast and in real time. The drag and drop interface enables traders to make quick adjustments of positions and stops manually with ease. You can also do position sizing calculations even if you are offline.
Unfortunately, the Metatrader position calculator can only be used with the Metatrader platform which means it will be useless if your online broker is using a different one. They function well with currency pairs which has the USD as one of the currencies. They may not work well with cross rates.
If you are using a different platform without a built in position calculator don’t lose hope because there is a way to get around this. What you need to do is to bookmark an online position sizing calculator from another site. Input the required data and have it calculate your position size and your cut loss point (you may need to input your entry point for this). Use the calculated results to draw the lines manually on the chart of your own trading platform. It may be tedious but it will work. The most important thing is to have a money management strategy in place for each of the trades you make.
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