Position size calculator
This position size calculator works backwards from risk. You say how much of your balance you are prepared to lose if the stop-loss is hit, and how far away that stop is. The calculator returns the trade size that keeps the loss at that amount, before costs and slippage.
Position size calculator formula
Units = risk amount ÷ (stop in pips × pip value per unit)
Lots = units ÷ 100,000 (or ÷ 100 oz for gold)
The pip value per unit is 0.0001 for a USD-quoted pair such as EUR/USD, and needs converting for yen, dollar-based and cross pairs. The calculator does that conversion using the price you enter.
Worked example
These figures are illustrative.
- Account balance $8,000; risk per trade 1.5%: $8,000 × 1.5% = $120.
- EUR/USD with a 30-pip stop: 30 × 0.0001 = $0.003 of risk per unit.
- Units: $120 ÷ $0.003 = 40,000 units, which is 0.4 lots.
Check it the other way: 0.4 lots makes each pip worth $4, and 30 pips × $4 = $120.
How to use the result sensibly
- Round down, not up, if your platform only accepts sizes in steps of 0.01 lots.
- Set the stop where the trade idea is proven wrong, then size the position to fit it. Do not move the stop to fit a bigger position.
- Remember that gaps, fast markets and costs can make the actual loss larger than planned.
- Check the margin required with the margin calculator; a small stop can produce a position that needs more margin than you have.
Many traders keep risk per trade small because losing runs happen to everyone. Five losses in a row at 1.5% each cost roughly 7% of the account; at 10% each they would cost about 41%. Practising this discipline on a demo account is covered in forex trading practice.