The order the calculation goes in
Decide what one loss may cost. Find where the stop belongs on the chart. Then the position size is whatever makes those two agree. Choosing a size first and putting the stop wherever it lands reverses this, and the resulting risk is whatever the market happens to hand you.
The arithmetic
Risk in money divided by the stop distance in pips gives the money per pip you can afford. Divide that by the pip value for one lot and you have the lot size. Every position size calculator does exactly this, including the one on this site.
Why this is the real risk control
A stop can be jumped in a gap. Leverage can be capped or not. But the size of the position determines the size of the loss in every scenario, including the ones that do not go as planned. It is the only input that always applies.
When the answer is uncomfortable
Sometimes the calculated size is smaller than the platform allows, or so small the trade feels pointless. That is the calculation telling you the account is too small for that stop distance. Rounding up is how the answer becomes a problem.
In short
| Inputs | Balance, risk percent, stop distance |
|---|---|
| Output | Lot size |
| Decided | Before entering |
| Never | Rounded up to feel worthwhile |
Common questions
What percent should I risk per trade?
Small enough that a normal losing run does not end the account. The losing streak calculator turns that from a guess into a number: enter your win rate and see what a normal run costs at the risk you are considering.
Should risk be a percent of balance or a fixed amount?
A percent shrinks the risk as the account falls, which slows a drawdown. A fixed amount is simpler and does not adapt. Both are used; the percent is more forgiving during a bad run.
My calculated size is below 0.01 lots. What now?
The stop is too wide for the account at that risk level. Either the trade is not available to you at this account size, or the stop belongs somewhere closer for reasons the chart supports. It is not a reason to trade 0.01 anyway.
Trading forex and CFDs on margin carries a high level of risk. Most retail accounts lose money. Nothing on this page is financial advice or a recommendation to trade.