Position size calculator
This position size calculator is the tool most beginners skip and most experienced traders use first. Instead of picking a lot size and hoping, you decide how much of your account you are willing to lose if the trade fails, set a stop-loss, and let the maths tell you how big the position should be.
The formula
Position size (lots) = money at risk ÷ (stop-loss in pips × pip value per lot)
For pairs quoted in US dollars, the pip value per standard lot is $10. For other pairs the calculator converts it using the price or conversion rate you enter.
Worked example
Illustrative numbers: your balance is $5,000 and you choose to risk 2% on a EUR/USD trade, with a stop-loss 40 pips from your entry.
- Money at risk: $5,000 × 2% = $100.
- Loss per standard lot if the stop is hit: 40 pips × $10 = $400.
- Position size: $100 ÷ $400 = 0.25 lots (25,000 units).
With a tighter 20-pip stop the same $100 would allow 0.5 lots; with a wider 80-pip stop it would allow 0.125 lots, which most platforms would round down to 0.12. The risk in dollars stays the same; only the size changes.
Reading the position size calculator result
The figure is the largest position at which a stopped-out trade loses roughly the amount you chose. Round down to the nearest size your platform accepts. Keep in mind that the stop can fill at a worse price in a fast market or over a weekend gap, and that spreads and commissions add to the loss.
Many educators suggest risking only a small percentage of the account on any one idea, often 1% or 2%, so that a run of losing trades does not end the account. After sizing, check the collateral the trade needs with the margin calculator, and see what each pip is worth with the pip calculator.