Position size calculator
A position size calculator answers the question most beginners ask in the wrong order. Instead of choosing a lot size and then seeing what might be lost, you decide the acceptable loss first, set a stop where the trade idea is proven wrong, and let the arithmetic tell you how large the position can be.
The formula
Lots = money at risk ÷ (stop distance in pips × pip value per lot)
Pip value per lot is $10 for pairs quoted in US dollars; for other pairs the calculator converts it using the current rate, the same way the pip value calculator does.
Worked example
Illustrative figures: an $8,000 account, a 1.5% risk limit and a EUR/USD trade with a stop 40 pips from entry.
- Money at risk: $8,000 × 1.5% = $120.
- Loss per lot if the stop is hit: 40 pips × $10 = $400.
- Position size: $120 ÷ $400 = 0.30 lots.
If the stop were 80 pips away, the same $120 would allow only 0.15 lots. Wider stops mean smaller positions, which is the whole point: the risk stays constant while the trade structure changes.
Reading the result
- Round down. If your provider's minimum step is 0.01 lots, round the result down to stay within your limit.
- Add costs. The spread and any commission sit on top of the stop loss, and slippage can add more in fast markets.
- Check margin. A correctly sized position may still need more margin than is free in the account; confirm with the margin calculator.
Many traders use a fixed percentage between half a percent and two percent per trade, but the right figure is personal and depends on how many trades you might lose in a row. What matters is that the number is chosen before the trade, not adjusted afterwards. The forex analysis module explains how stop placement follows from analysis.
When the account currency is not the dollar
The calculator works in US dollars. If your account is held in another currency, convert the balance first, or convert the result: the logic is identical, only the unit changes. Keep in mind that the value of each pip in your own currency shifts as exchange rates move, so a position sized precisely today may carry slightly more or less risk next week.