What Is a Forex Calculator and How to Use It

If you’ve ever executed a Forex trade and it crossed your mind to evaluate anticipated profits, the associated risk, or the pip worth of your trade – you’re not the only one; nearly every trader goes through that – especially when they are just starting their trading journey. Forex is fast-paced, technical, and filled with numbers that seem to carry no significance.
This is where the Forex calculators come in. Forex calculators serve as a calculative purpose that allows a trader like you to measure the important numbers such as pip values, margin equities, pnl, position sizes, and possibly even swap rates.
The next time you enter into a trade and are wondering about the amount of profit, risk or pips worth the trade is, the Forex calculator will answer that and be there in an instant. Allowing you to avoid guesstimating or Calculating manually, which seems to take forever and feel like cleaning up a big mess of numbers. The Forex calculator is there to enter details surrounding the pair traded, lot size, leverage and account currency, then it will output an answer accurately and in short period of time.
The Forex calculator is your part-time financial assistant – it is there to avoid any surprises at the completion of the trade required or in that of the future.

Why do you need a Forex calculator?

Forex is a numbers-driven marketplace.Every pip matters, every position has a risk (and an opportunity) associated with it. If you open a trade without any understanding of the numbers associated with that trade, we will call it trading in the dark.
A Forex calculator helps you to:
Correctly size your trade
Understand your profit and loss potential
Understand what the margin required to open the trade is
Avoid being over-leveraged
Better manage your risk
To boil it down to the very basics: better calculations = better decisions = better trading results.

The three most practical Forex calculators

There is an abundance of different kinds of calculators. However, I believe there are 3 specific types of calculators that can actually be considered the most practical, or most necessary, to being able to trade daily.
Let’s go over each one at Outet Market.

1. The Pip Calculator

A pip calculator helps you determine the value of each pip move based on your contract size for the trade. This is very important because any profit (or loss) will be proportional to how many pips the market moved and what the value of each pip was.
For example, 20 pips does not sound like much, but based on how you sized the lot size move, that could be a $2 profit or a $200 profit. Without knowing what each pip was worth, you wouldn’t be able to calculate how much risk to plan your trade.
To using it , you will simply need to know things like:
The currency pair,
What the lot size is (e.g. micro, mini, standard)
What the base account currency is
Then it will tell you the dollar value of one pip without you having to calculate this manually.
This makes it that much easier to construct a plan for your stop-loss and profit targets.

2. Margin Calculator

The margin is the amount of money that your broker requires you to have in reserve before executing a trade. If you cannot provide enough margin, the order will not be executed, or even worse, if you already have trades open, those trades will be closed.
A margin calculator can show you exactly how much margin you need before placing a trade using an unprecedented level of accuracy so that you can make sure you don’t open up a position and then find out there’s not enough margin in the account to support it.
To use this tool, simply enter:
The currency pair
Your trade size
The leverage ratio
Account currency

Then, it will tell you approximately how much of your account balance will be “locked” as margin.
This helps avoid margin calls and gives you an easier way to visualize how much capital is available to trade.

3. Profit Calculator

Once you know the number of pips that you want to target and how much each pip is worth, you may want to get a ballpark idea of how much profit will be made, and a profit calculator forex makes this concept very easy.
You would enter:
Entry price
Exit price
Lot size
Currency pair
Instantly it shows you how much you could possibly gain or lose once the market hits those levels.
This is very helpful while placing your take-profit and stop-loss levels, and even avoiding getting into trades with poor risk-to-reward ratios.

read more: Why Does Forex Spread Widen?

Why Forex Calculators Save You from Big Mistakes

It is very easy to make the wrong calculations in Forex. You may think you’re risking $20 on a trade, when in fact, with the pip value being higher on some pairs, you may in fact be risking $You can open a larger lot size because you have thought that it would require marginal capital.
You may think your stop-loss is small, but it could be large for your account size.
Calculators remove risks because they tell you values before you enter the trade.
This accuracy will enable you to be consistent and disciplined, characteristics essential to a profitable trader.

A Simple Example You Can Relate To

Let’s say you want to trade the EUR/USD, put a 25 pip stop-loss, and want to risk just ten dollars on the trade because you are keeping it conservative.
In case you want to recalculate a lot size manually, you will probably waste time or end up with a wrong number. But there are a few calculators where you can:
Open the pip calculator to check pip value.
Open the profit calculator forex to estimate loss.
Open the margin calculator to double-check that your broker will allow you to take this position.
In less than 30 seconds, you have a complete risk profile for your position.
No guessing. No stressing. No surprises.

Calculators Make You More Professional As A Trader

Think about those traders working in banks or institutional desks. They do not wager. Each and every detail is calculated before an entry is taken.Utilizing Forex calculators encourages you to establish a similar approach:
You know the risk
You know the margin
You know the pip value
You know potential return
You have the two components that most amateurs do not possess: a structure and confidence.

Calculators/Increases Trading Psychology

Trading psychology is heavily related to clarity. If you know your numbers, you feel relaxed. If you feel relaxed, you will make better decisions.
You will not panic as readily if a trade momentarily moves against you because you know exactly what you are risking.
You will not over-trade because you are aware of your parameters.
You will not chase losses or FOMO because everything is calculated and not emotional.
Having these tools is like having a safety net that catches you if you fall—and then your process just keeps on going.

When you should use Forex calculators

You should be utilizing calculators:
Before you place any trade
When adjusting your trade size
When you want to plan your risk
When deciding your potential set-ups reward
When deciding the required margin to allocate to a trade
The more consistent you are in utilizing them, the more disciplined you will trade.

Do professionals use these items daily?

Yes. Even professional traders utilize calculators because nobody wants to be guessing numbers during fast-moving markets.
Many of the professional traders start their day by inputting the pip values for the pairs they want to trade, and what the margin requirements, and stopping points will be.
It’s their trade process and should become yours as well.

What common mistakes do calculators keep me from making?

Below is a short list of the errors calculators help you avoid:
Having debunked the amount you want to risk, therefore, trading too large a position.
Miscalculating your submitted order size, resulting in incorrect margin requirements.
Risking more than you allowed yourself in your plan from your analyzer phase.
Setting unequally buy-again levels, and understanding those define your risk on that trade.
Using an erroneous pip value for exotic pairs.
If you have blown an account, or your balance is much less than it could have been because of simple math errors, then you realize how immensely valuable entails precision in these areas.

Forex calculators make trading more straightforward, not harder

Some traders feel that calculators complicate their trading. In actuality, they simplify everything.
You are not calculating by hand, you are keying in data and providing you correlations.
Once again, resulting in increased strategy, analysis, and decision-making.

How to choose the right Forex calculator

You want an inexpensive Forex calculator that is:
Clear to use
Electronic or online
Available and current
Correct
Match your brokers pricing model
Most trading platforms now have calculators embedded, but there are also outside options for differing approaches, or just a larger amount of calculations.

Closing thoughts. A simple tool with complex implications.

A Forex calculator may not appear exciting at first glance. It’s not as fancy as your indicators or candlestick chart. But, it’s among the one item separating the undisciplined trader (the amateur) from the disciplined trader.
Whether it may be a pip calculator, margin calculator or profit calculator— Forex calculators provide you an essence—clear action.
Clarity leads to discipline
Discipline leads to consistency
Consistency leads to success
Ultimately, using calculators will not make you a perfect trader, but it will help you become a wiser trader, a more responsible trader, or simply a more confident trader, and in Forex, that’s half the battle.