Position size calculator
This position size calculator answers the question traders should ask first: given my account and my stop-loss, how big can this position be without risking more than I have decided to? It is the mirror image of the pip calculator.
How the position size calculator works
Lots = risk amount ÷ (stop distance in pips × pip value per lot)
Pip value per lot is $10 on pairs quoted in dollars; for other pairs the calculator converts it using the price or the extra rate it asks for.
Worked examples
These figures are illustrative.
EUR/USD. Balance $8,000, risk 1.5% per trade, stop-loss 40 pips away.
- Risk amount: $8,000 × 1.5% = $120.
- Loss per lot if the stop is hit: 40 pips × $10 = $400.
- Position size: $120 ÷ $400 = 0.3 lots.
Gold. Balance $8,000, risk 1%, stop $15 below entry. At $0.01 per pip that stop is 1,500 pips, and each pip is worth $1 per 100-ounce lot, so one lot would lose $1,500. The risk amount of $80 allows $80 ÷ $1,500 = 0.0533 lots. Platforms trade in steps, usually of 0.01 lots, so you would round down to 0.05 lots, which risks $75.
Reading the result
The answer is the largest position that keeps a stopped-out loss within your chosen percentage. Always round down. Remember that a stop is an instruction, not a guarantee: in a fast market or over a weekend gap the fill can be worse than the stop price, so the actual loss can exceed the planned one. Spreads and commissions also add to it.
Many long-standing risk guides suggest risking only a small percentage of the account on any one idea, so that a run of losses, which every approach suffers, leaves the account able to continue. The right figure is a personal decision. Check how much margin the resulting position needs with the margin calculator, and see how a whole account is run in forex account management.