HOW TO CALCULATE YOUR LOT SIZE

Correct position sizing comes down to one formula: divide the amount you are willing to risk on the trade by the stop distance multiplied by the pip value — everything else is detail.

The formula

Lot size = Risk amount ÷ (Stop distance in pips × Pip value per lot)

The "risk amount" is a fixed percentage of your account — commonly 0.5% to 1% for beginners — decided before you look at any specific trade. The "stop distance" comes from your chart, based on where the trade idea is proven wrong. The "pip value per lot" depends on the instrument and your account currency.

Worked example 1 — EURUSD

Account: $1,000. Risk: 1% = $10. Stop distance: 25 pips. On a standard lot, EURUSD's pip value is roughly $10 per pip (for a $-denominated account), so on a mini lot (0.10) it is roughly $1 per pip.

Lot size = $10 ÷ (25 × $1 per pip per 0.10 lot) = 0.04 lots (approximately)

Worked example 2 — USDJPY

Account: $1,000. Risk: 1% = $10. Stop distance: 30 pips. Pip value for USDJPY varies with the current USDJPY exchange rate because the quote currency is yen, not dollars, so it must be converted — this is exactly the kind of calculation worth checking with a calculator rather than estimating.

Lot size = $10 ÷ (30 × pip value per lot in USD)

Worked example 3 — XAUUSD

Account: $1,000. Risk: 1% = $10. Stop distance: 300 points (using a broker where $0.01 = 1 point and 0.01 lot moves $1 per point).

Lot size = $10 ÷ (300 × $0.01 per point per 0.01 lot) = 0.03 lots (approximately)

Lot size reference table

These are illustrative figures, not universal constants — pip and point values differ between brokers based on contract specification and account currency, so treat the table as a demonstration of the method rather than a number to copy directly.

Why this matters more than the entry itself

Two traders can take the exact same entry and have completely different outcomes on their account purely because one sized the position to their stop and the other guessed a round lot number. Position sizing is the one part of trading that is pure arithmetic — get it right every time and the rest of the strategy has a chance to work.

Use a calculator instead of doing it by hand

Rather than doing this arithmetic under pressure while a chart is moving, use our free lot size calculator at /tools/lot-size-calculator — enter your account size, risk percentage and stop distance, and it returns the position size directly.

A realistic risk note

No position-sizing formula prevents losses — it only controls how large each loss is relative to your account. A correctly sized trade can still lose; the goal is that no single loss, or realistic string of losses, threatens the account.