The formula
Lots = (account balance × risk %) ÷ (stop loss in pips × pip value per lot)
Why sizing beats picking winners
Accounts rarely die from bad entries. They die from one oversized trade that went wrong at the worst moment. Position sizing inverts that risk: you decide the loss before you enter, then size the trade so the market cannot take more than that. Get it right and a long losing streak is survivable. Get it wrong and a single trade can end the account, no matter how good the analysis was.
It is also the only variable here you fully control. You cannot control whether the trade wins. You can control, exactly and in advance, what being wrong costs.
Three worked examples
| Account | Risk | Stop | Pip value | Position | Loss if stopped |
|---|---|---|---|---|---|
| $500 | 1% | 20 pips | $10 | 0.02 lots | $5 |
| $1,000 | 1% | 20 pips | $10 | 0.05 lots | $10 |
| $1,000 | 1% | 50 pips | $10 | 0.02 lots | $10 |
| $5,000 | 2% | 30 pips | $10 | 0.33 lots | $100 |
Read rows two and three together, because they carry the whole idea. Same account, same risk, different stop. The position more than halves when the stop widens, and the money at risk never moves. That is the mechanism: the stop sets the size, the size does not set the risk.
The stop comes first, and it is not a dollar amount
A stop belongs where the trade idea is proven wrong: below the swing low, outside the zone, past the level that breaks the structure you traded. It does not belong at a round number you find comfortable, because the market has no interest in your comfort. Place the stop on the chart first, then let the calculator tell you what size that allows. Doing it the other way round - picking a size, then placing a stop where the loss feels tolerable - is how most beginners trade, and it is why their risk per trade is effectively random.
Lot sizes, in plain numbers
| Name | Lots | Units | Pip value (USD pairs) |
|---|---|---|---|
| Standard | 1.00 | 100,000 | $10.00 |
| Mini | 0.10 | 10,000 | $1.00 |
| Micro | 0.01 | 1,000 | $0.10 |
Most brokers accept 0.01 as the minimum step, which means an account under a few hundred dollars cannot always size correctly on a tight stop. Some offer cent accounts where the same number means one hundredth of the usual size - useful for learning with real money, confusing if you forget which account you are in.
Pip value is the part people get wrong
Almost every sizing guide assumes $10 a pip. That is exactly right for EUR/USD, GBP/USD, AUD/USD and the other dollar-quoted majors. It is wrong for everything else. On USD/JPY the pip value moves with the exchange rate; on GBP/JPY or EUR/GBP it has to be converted back to your account currency and can run noticeably higher. Get the real figure from the pip value calculator, which converts at today's live rate, then feed it in here.
One more trap: if your platform shows five decimals on EUR/USD, the last digit is a pipette, one tenth of a pip. A "15 point" stop there is 1.5 pips, not 15. Sizing on that confusion produces a position ten times too large.
Crypto, gold and indices
The arithmetic does not change, only the unit. In crypto you size in coins: quantity = risk amount ÷ (entry price − stop price). A $10,000 account risking 1% with a stop $2,000 below a $84,000 entry can hold 0.05 BTC. If the position is leveraged, that same trade also carries a liquidation price, which is a separate thing to check on the liquidation price calculator - and your stop should sit far in front of it, never near it.
The 1% rule, and when it is wrong
One percent is a default, not a law. It is too high if you take ten correlated positions at once, because three long altcoin trades are one bet at triple size. It is arguably too low if you trade twice a month with a tested edge. What makes it the right starting point is the losing streak nobody plans for: with a 45% win rate, eight losses in a row arrive roughly once every four hundred trades, which is one ordinary year. See what that does to an account in the risk of ruin simulator.
What the number here does not include
- Spread. It widens the real loss. A 2-pip spread on a 20-pip stop makes the loss about 10% larger than planned.
- Commission. Charged per lot on raw and ECN accounts, so it scales with the size this tool returns.
- Slippage. A stop is an order to sell at market once a level trades. In a gap it can fill well past your price.
- Swap. Overnight financing, charged at triple rate on Wednesdays at most brokers.
None of these change the method. They are the reason to leave a little margin rather than sizing to the last cent.
Then trade it somewhere honest about costs
Perfect sizing is wasted if the venue quietly takes the edge back in spread and fees. We open funded accounts and measure spreads at real session times rather than repeating the marketing number: HFM advertises from 1.4 pips on Premium and we measured 2.7 pips on EUR/USD in the London session. See the full comparison in our forex broker reviews, or answer five questions in the Broker Matcher.
Frequently asked
How do you calculate forex position size?
Position size in lots = (account balance × risk %) ÷ (stop loss in pips × pip value per lot). Decide the money you are willing to lose first, then divide it by how far away your stop is and what one pip is worth. Example: a $1,000 account risking 1% ($10) with a 20-pip stop on EUR/USD, where a pip is $10 per standard lot, can trade 0.05 lots.
How much should I risk per trade?
One percent or less of the account is the common professional ceiling, and many desks sit below it. The reason is survival arithmetic rather than caution: at 1% risk, eight consecutive losses costs about 8% and is fully recoverable; at 5% the same streak costs a third of the account and changes how you trade afterwards. This calculator defaults to 1%.
What is pip value and why does it matter?
Pip value is what one pip of movement is worth for your position. For a standard lot (100,000 units) of a pair quoted in US dollars it is exactly $10 and does not move with price. On yen pairs and crosses it has to be converted at the live rate, and it can be 20-30% higher, which means a trader assuming $10 is quietly running 20-30% more risk than planned.
What is a lot in forex?
A standard lot is 100,000 units of the base currency, a mini lot is 10,000 (0.10) and a micro lot is 1,000 (0.01). Most retail accounts work in micro and mini lots. The calculator returns the exact figure and you round down to what your broker accepts, never up.
Should I round the lot size up or down?
Down, always. Rounding 0.047 up to 0.05 adds about 6% to the risk you decided on, and doing that on every trade compounds into a risk setting you never chose. Rounding down costs a fraction of the upside and keeps the number honest.
Does position sizing work for crypto and gold?
The logic is identical: risk amount ÷ stop distance = position size. What changes is the unit. In crypto you size in coins, so quantity = risk amount ÷ (entry − stop) in dollars. Gold trades a 100-ounce contract and platforms disagree on what counts as a pip, so confirm in your terminal before sizing.
What if my stop is very tight?
A tight stop produces a large position, which is where the hidden danger sits: the same risk amount now sits behind far more leverage, so spread and slippage matter much more, and ordinary noise can take you out. If the implied position is several times your balance, the stop is too tight for the instrument rather than the risk being too small.
Does this calculator include spread, commission and swap?
No. It sizes the position so that hitting your stop costs your planned risk, which is the main job. Spread widens that loss slightly, commission is charged per lot, and swap applies overnight. On a 20-pip stop with a 2-pip spread the real loss is roughly 10% larger than planned, so leave a margin rather than sizing to the last cent.
Is this position size calculator free?
Yes, with no sign-up. It runs entirely in your browser and the numbers you type never reach us.
Trading is high risk and most retail accounts lose money. This tool is education only, not financial advice.