How the position size formula works
Position sizing turns a risk decision (“I will risk 1% of my account”) into an order size. The formula is:
Position size (lots) = Risk amount ÷ (Stop loss in pips × Pip value per lot)
With a $10,000 account risking 1%, your risk amount is $100. If your stop is 20 pips on EUR/USD, where one standard lot is worth $10 per pip, the position size is $100 ÷ (20 × $10) = 0.50 lots.
Why it matters
Fixed-lot trading means your risk changes every time your stop distance changes. A 10-pip stop and a 50-pip stop with the same lot size carry five times different risk. Sizing from your stop keeps every loss the same percentage of your account, which is what keeps a losing streak survivable.
Account currency and pip value
Pip value depends on the quote currency of the pair and your account currency. For pairs quoted in USD (EUR/USD, GBP/USD) on a USD account, a standard lot is $10 per pip. For USD/JPY or EUR/GBP the pip value must be converted, which is why the calculator asks for the current price. Update the price field for the most precise result.
Lot sizes at a glance
| Lot type | Units | Approx. pip value (USD-quoted pair) |
|---|---|---|
| Standard | 100,000 | $10.00 |
| Mini | 10,000 | $1.00 |
| Micro | 1,000 | $0.10 |
Frequently asked questions
How much should I risk per trade?
What is a pip value?
Does this calculator work for gold?
Calculators are provided for educational purposes. Verify contract sizes, pip definitions and margin requirements with your broker. Risk warning: Trading forex, futures, CFDs, stocks and other leveraged products involves a high risk of loss and is not suitable for every investor. Past performance is not indicative of future results. Nothing on this site is investment advice.