How Do You Calculate Trade Costs and Risks in Simple Way?
Lately I am trying to improve my trading system, and I see that many traders talk about how important it is to calculate everything before opening any position, like spread cost, lot size, and risk percentage. I feel this careful planning is similar to other fields where people do step-by-step calculations, for example painting estimating, where every small detail must be counted to get the right result. Because of this, I want to understand how experienced traders here calculate their trade costs and risks in a simple and clear way. Do you follow any fixed formulas, or do you use custom indicators or scripts in MetaTrader to help you? I am still learning, so any tips for better trade preparation or risk calculation will be very helpful for me.
Step-1: google 'trading cost'
You'll instantly see how spread, commission and SL fit together.
[S]pread cost...
You should visit your broker-dealer's website for its average spread statistics. Most broker-dealers are required to published spread info per public disclosure rules, and they use it to stay competitive with other broker-dealers. Note that spreads surrounding the daily close/open are excluded--the stats generally assume you won't be trading when the spread is extremely high, so they're not included in the average calculatioin.
As an alternative, you could pull your own spread data. You could extract it from real live historic tick data by running a utility in the MT5 Tester. There are some free utilities in the mql5.com CodeBase and/or Articles for that purpose. Here's one such Script:
Script to extract Candlesticks data from all time frames to CSV.
Mthandeni Mnyandu, 2024.10.15 05:29
This MQL5 script exports candlestick data for various timeframes into a CSV file, capturing essential market information like open, high, low, and close prices. It analyzes each candlestick's characteristics, including body and wick sizes, while calculating additional metrics such as candle gaps. After processing the latest 21 bars, it notifies the user upon successful data export.[L]ot size, and risk percentage...
To calculate lot size by risk percentage, there are many online lot size calculators. Here's one:
And here's an automatic risk:reward (RR) box Script for you chart(s):
Auto SL TP by Risk Reward Ratio
Duy Van Nguy, 2025.05.21 03:11
The Auto SL TP by Risk Reward Ratio script is a simple yet powerful tool designed for MetaTrader 5 traders who want to streamline their risk management process. This script automates the process of setting Stop Loss (SL) and Take Profit (TP) levels for open positions based on a user-defined Risk:Reward ratio and Stop Loss in pips. Whether you're a beginner or an experienced trader, this script saves time and ensures consistent risk management.
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Lately I am trying to improve my trading system, and I see that many traders talk about how important it is to calculate everything before opening any position, like spread cost, lot size, and risk percentage. I feel this careful planning is similar to other fields where people do step-by-step calculations, for example painting estimating, where every small detail must be counted to get the right result. Because of this, I want to understand how experienced traders here calculate their trade costs and risks in a simple and clear way. Do you follow any fixed formulas, or do you use custom indicators or scripts in MetaTrader to help you? I am still learning, so any tips for better trade preparation or risk calculation will be very helpful for me.