How to Calculate Crypto Lot Sizes, Margin and Profit
When making your manual calculations, there are five trading terms that you must understand. These are: lots, margin requirements, leverage, profit and currency conversions. We will cover all these areas in the below article.
When trading cryptocurrencies 1 lot is always equal to 1 of the base currency being traded.
The base currency is the first currency in the quote.
For example, when trading BTCUSD, BTC is the base currency.
When trading DSHEUR, DSH is the base currency.
Margin is how much you need to open the position.
Margin is always calculated in the base currency of the quote, as follows:
Note, the above table shows full margin requirements, and does not take the account leverage into consideration.
When trading with leverage, the full margin requirement is divided by the leverage amount, as follows:
Minimum Lot sizes
When trading Forex, the minimum lot size is usually 0.01 lots, which is known as a micro lot.
This micro lot has a value of 1,000 of the base currency being traded. For example, 0.01 lots USDCAD is $1000.
Cryptocurrencies however, may have much smaller value than this. For example, a micro lot of ADA would have a value of only 0.01 ADA – which is the equivalent to only $0.0088 – which of course is a much too small amount to trade.
This is the reason that cryptocurrencies, unlike Forex, have different minimum trade sizes – it is to ensure that the trade being placed actually has a substantial value.
You can see all the minimum trade volumes in the below table, and we have also shown you what the equivalent USD value of the minimum trade is:
So, as we’ve discussed above, trade size and margin requirements are all done in the base currency of the pair being trading.
Profit, however, is always calculated in the quote (second) currency of the pair being traded.
The trade profit in the quote currency is simply the difference between the opening price and the close price of the trade as follows:
Now, if your MT5 trading account currency is different to that of the quote currency, you will need to convert the profit amount into your MT5 currency.
The MT5 platform of course calculates all this for you automatically, however it’s always good to understand how the calculation is being made.
You need to multiply or divide the profit amount by the exchange rate of the quote currency and your MT5 base currency.
Sounds complicated but it’s really very simple!
See the table below for the exact calculations (where ‘/’ means divide by the exchange rate, and ‘X’ means multiply by the exchange rate), depending on your MT5 currency:
Margin and Profit calculations for crypto currency trading are relatively simple, however they can seem confusing due to the huge differences in value of each crypto.
Stick to our simple rules above and you’ll have no problems at all!
Here’s a quick reminder of the manual calculations we’ve been through: