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Position sizing is the process of determining how many lots to trade based on your account size and the amount of risk you're willing to take on a single trade. It is arguably the most important skill in trading — more important than entry signals or technical analysis.
The golden rule of risk management is to never risk more than 1–2% of your account balance on any single trade. If your account is $10,000 and you risk 1% per trade, your maximum loss per trade is $100. Position sizing calculates the exact lot size that keeps you within this limit.
Without proper position sizing, even a winning strategy can blow an account. A trader who risks 10% per trade only needs 10 consecutive losses to wipe out their account. A trader who risks 1% per trade can survive 100 consecutive losses — a nearly impossible scenario — and still have capital to recover.
Read the explainerLot Size Is Not Risk: Why the Same 1.00 Lot Risks Different Amounts
Most professional traders risk between 0.5% and 2% per trade. Beginners should start at 0.5–1%. Never risk more than 3% on a single trade — even if you're highly confident in the setup.
Stop loss and position size are inversely related. A 20-pip stop loss allows a larger position than a 50-pip stop loss (at the same risk percentage). The calculator adjusts automatically so your total risk stays constant regardless of stop distance.
A standard lot is 100,000 units of the base currency. A mini lot is 10,000 units (0.1 lots), and a micro lot is 1,000 units (0.01 lots). The smallest size you can trade depends on the instrument; the calculator rounds to each instrument's own minimum and step.
No. Position size should vary based on your stop loss distance. The goal is to risk a consistent percentage of your account, not a consistent lot size. This is why a position size calculator is essential.
Yes. The calculator uses each instrument's own contract size and pip size, converts the pip value into your account currency, and rounds the result down to a lot size the instrument accepts. Check the pip size shown under the stop loss field, as it differs between instruments. On indices one pip is one whole index point, so a 20-pip stop on US500 is 20 points.
