Position sizing
Working out the right lot size from your stop and your risk limit.
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Lessons
- 01How to calculate position size.To calculate position size, multiply your account by the percentage you will risk, then divide by the stop distance in pips times the pip value per lot. With $5,000, 1% risk and a 25 pip stop on EUR/USD, that is $50 ÷ (25 × $10) = 0.20 lot. Round down when the answer falls between lot steps.
- 02Position sizing across different pairs.The same stop in pips risks different money on different pairs because pip value changes. On one standard lot, a 25-pip stop is $250 on EUR/USD, $166.67 on USD/JPY at 150.00 and $25 on gold, in a US dollar account. Divide your risk by the stop times that pair's pip value per lot to get the lot size.
- 03Position sizing worked examples.To size a trade, divide the money you are willing to lose by what one lot would lose at your stop. With $50 at risk and a 25 pip stop on EUR/USD, one lot loses $250, so you trade 0.20 lot. Pairs not quoted in your account currency need one extra step: converting the pip value.