Position Size Calculator: Lots From Risk and Stop Distance

The position sizing formula

Decide the cash risk first: balance × risk percent. Then divide that cash risk by the dollar risk of one lot, which is the stop distance in pips multiplied by the pip value per lot. The result is the largest position that keeps a losing trade inside your risk cap. Most professional risk frameworks cap risk at 1 to 2 percent of equity per trade, so the account survives a losing streak intact.

Worked example

Balance 5,000 USD, risk 2 percent, stop 35 pips on EUR/USD where a standard lot pays about 10 USD per pip. Cash risk is 100 USD. One lot would lose 350 USD at the stop, so the size is 100 / 350 = 0.29 lots. If the stop later widens to 50 pips, the size drops to 0.20 lots; the risk stays 100 USD either way. The stop placement drives the size, never the other way round.

FAQ

What risk percent should a beginner use?

Most risk-management frameworks recommend 1 percent or less while learning. At 1 percent, ten losses in a row cost about 9.6 percent of the account, which is painful and fully recoverable.

Does the formula work for gold or indices?

Yes. Swap the pip value per lot for the instrument’s point value per lot and the same arithmetic applies. Check the contract specification of the instrument you trade for the exact point value.

Where does leverage come in?

Leverage only sets the margin the broker locks while the trade is open. The loss at your stop depends on position size and stop distance, not on the leverage ratio.

Check what one pip is worth for your pair with the pip value calculator, and what the spread costs with the spread cost calculator. The full sizing method is covered in the learn trading guide.