Put a piece of string (or eqivalent) in the horses mouth. Mark with a pen the string on the edge of the horses lips. Measure it, and that's the sixe of you horses bit. They usually come in 1/2" sizes (occasionally 1/4" if you're lucky), and its always best in round up.
You'll know if your using the correct bit because your horse is happy (ie not chomping too much, evading bit etc) and you have control... If your not sure, get a riding instructor out to help you.
In theory that may be correct, but I have found in reality adding that much makes the bit too big and then you have way more than a finger down each side of the bit.
I have always found the best way is to measure the mouth with string, round it up, then find a bit that size and try it. Making sure you can put a finger down each side.
i have found the best way to measure is using a wooden spoon handle or wooden dowling and put that into the horses mouth where the bit would lie. That way, it sits quite well in position where the bit would be. Use a pen to mark each side at the edge of the horse's lips. Then add 1/4 - 1/2 inch (def go go a half inch if your gonna use roundings). This was the method a company told me to use when i was buying my bit and i found it very easy to do. I was told you need at least 1/4 inch and up to 1/2 added on to your measurement of the horses mouth. Hope that helps!