At Tycoon Funded, there are no specific limits on the lot size during any of our evaluations. We do not impose any additional restrictions beyond what the broker allows. Traders are free to open positions without concerns about a max lot size, but it is important to understand how margin and available equity come into play when placing trades.
Understanding Margin and Available Equity
While there is no set max lot size, it is essential that traders remain mindful of their available margin. The responsibility falls on the trader to ensure that they do not exceed the available margin when opening positions. If you exceed the available margin, a margin call may be triggered, which will automatically close the least profitable position to reduce your exposure.
In addition, if your account balance falls below a certain threshold, a Stop Out will occur. This is an automated process where the platform will close out your losing trades to prevent further losses, based on your available margin and account equity.
How to Determine Max Lot Size
To determine the maximum number of lots you can open, you need to consider the leverage being used and your available equity. You can check the contract specifications for each symbol on the trading platform to determine the leverage and margin requirements for opening a position on that instrument.
The formula to calculate the maximum number of lots you can trade is:
Available Capital = Account simulated equity x Leverage
Max Lots = Available Capital ÷ Contract Size
For example, with a standard lot size of 100,000 units, the pip value is $10 (100,000 x 0.0001).
Example Calculation
Let's say you have a $100,000 Virtual Funds challenge account with a leverage of 1:30, and you're trading EUR/USD.
To calculate how many lots you can trade, we need to account for the margin required per lot for EUR/USD, which is the total amount of margin you must set aside for each trade.
Margin Per Lot: In your example, 1 lot of EUR/USD requires 3422.49 in margin (based on the current price of 1.02694).
Available Capital: You have $100,000 of available capital in your account.
Max Number of Lots: To calculate the maximum number of lots you can open, divide your available capital by the margin required per lot.
Max Lots = Available Capital ÷ Margin Per Lot
So, for this example:
Max Lots = $100,000 ÷ 3422.49 = 29.2 lots
Therefore, with $100,000 in available capital and 1:30 leverage, you can trade approximately 29 lots of EUR/USD, based on the margin required per lot.